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The U.S. Securities and Exchange Commission (SEC) has postponed its decision on the Global X Bitcoin Trust’s application to list a spot bitcoin exchange-traded fund (ETF). The delay, announced on November 17, 2023, marks a continued period of uncertainty in the spot bitcoin ETF space.
The Global X Bitcoin Trust seeks to offer investors exposure to bitcoin (BTC) through an ETF structure, a move that could potentially broaden the crypto asset’s appeal to a wider investor base. Initially filed by the Cboe BZX Exchange on August 4, 2023, the proposal aims to list and trade shares of the trust under the exchange’s commodity-based trust shares rules.
In its order, the SEC outlined its rationale for the delay, stating the need for further analysis on whether the proposed ETF aligns with the Securities Exchange Act’s requirements. Specifically, the securities watchdog is evaluating the proposal’s consistency with the Act’s mandates, which include the prevention of fraudulent and manipulative acts and practices and the protection of investors and public interest.
The SEC’s main concerns revolve around the liquidity and transparency of the BTC market and its susceptibility to manipulation. The commission’s proceedings will allow for additional public input and a thorough assessment of these concerns. “Do commenters agree with the exchange’s statements regarding the bitcoin market’s resistance to price manipulation?” the SEC asks the public in the order.
A key aspect of the SEC’s review is the sufficiency of the exchange’s statements supporting the proposal, along with the overall structure and safeguards of the proposed Trust. The trust’s objective is to mirror the performance of bitcoin’s price, less the trust’s operational expenses, and its assets will consist primarily of BTC held by its custodian. The Trust’s unique mechanism of “in-kind” transactions for selling or redeeming shares is also under scrutiny.
The SEC’s decision to delay does not indicate a final disapproval. The regulator is actively seeking public comments on the proposal, inviting interested parties to submit their views, data, and arguments. There will be a timespan of 35 days until the SEC has to decide again on the Global X filing and the public can comment in the meantime.
