Eric Balchunas and James Seyffart, exchange-traded fund analysts for Bloomberg, said a proposed rule change with the U.S. Securities and Exchange Commission could be the catalyst for the regulatory body to approve a spot Bitcoin ETF in mid-2023.
In a Thursday tweet, Balchunas said crypto platforms could fall under the SEC’s regulatory framework if the committee were to pass an amendment to change the definition of “exchange” proposed in January. The rule change would change the Exchange Act to include platforms “that make available for trading any type of security” – seemingly including cryptocurrencies, making their investment vehicles more palatable to regulators.
“Once crypto exchanges are compliant, the SEC’s main reason for refusing mock Bitcoin ETFs would no longer be valid, likely paving the way for approval,” the analysts said.
Balchunas and Seyffart said that under this amended definition of “exchanges,” which could be completed between November 2022 and May 2023, the SEC could approve spot crypto ETFs, including those with Bitcoin (BTC) exposure. The regulatory body has so far rejected all rule changes that would allow spot BTC ETFs to be listed on exchanges, despite approving some investment vehicles pegged to Bitcoin futures in 2021.
New note on why we think spot bitcoin ETFs will be approved in early summer 2023. The SEC is proposing to expand the definition of “exchange”, allowing crypto platforms under SEC reg. Then search (which can take a year) for ETFs to get the green light via @JSeyff pic.twitter.com/TtFgFXrJ8h
— Eric Balchunas (@EricBalchunas) March 24, 2022
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Many US lawmakers and industry leaders have opposed the SEC’s apparent reluctance to approve a mock Bitcoin ETF. In November, representatives Tom Emmer and Darren Soto sent a letter to SEC Chair Gary Gensler challenging the reasons the regulator has refused to market shares of a spot Bitcoin ETF. Bitfury CEO and former acting currency controller Brian Brooks also said at a December hearing that the United States was “undeniably lagging” in approving crypto ETFs.