Goldman Sachs applied to the US Securities and Exchange Commission (SEC) to invest in Bitcoin-related ETFs (ETFs are mutual funds that are traded during the session as normal share).
But wait a minute. There are no Bitcoin ETFs in the US market. There have been requests in the past to set up such an investment scheme, but they have been strongly opposed by the SEC. What has changed?
The answer is that a lot has changed. First the President of the SEC. At the helm now is Gary Gensler who knows Bitcoin and the technology behind it very well and he even taught blockchain at MIT. Then we have a wave of legal settlements involving the purchase of cryptocurrencies. A necessary step before licensing a Bitcoin ETF. Only recently, the case with Tether was closed, the SEC targeted Ripple, while BitMEX had previously been indicted in order to enter the derivatives market.
The latest victim was Coinbase, shortly before the Initial Public Offering (IPO). The Commodity Futures Trading Commission (CFTC) was fined $6.5 million for “reckless, false, misleading or inaccurate reporting, and laundering transactions.” The CFTC found that Coinbase had inflated turnover, creating it through multiple accounts with automated trading programs.
Apparently, many believe that the conditions have now matured to allow Bitcoin ETFs and do not want to be left behind. There is not just one candidate who has applied to the SEC, but six.
For the time being in the US stock market, anyone who wants to invest in Bitcoin buys Grayscale (GBTC), unless he chooses some of the four mining companies, which in fact have recorded higher returns than the currency itself with an average of 450% in the last 12 months. Grayscale is without a doubt the dominant player as it is the fund that manages $36 billion in digital assets.
However, it is not an ETF. That’s why Fidelity, Bitwise and others are trying to get a share of the pie of a market of tens and why not hundreds of billions. Grayscale will be the only “loser” in a regular ETF. That is why its shares have recently lost the premium they had.
The big question is not IF an ETF is approved, It’s a matter of time. It is certainly encouraging that so many big names are applying for the ETF right now. There is also the scenario that the SEC approves several of them at the same time, instead of choosing only one or two.