The US Securities and Exchange Commission (SEC) has mandated that First Trust Advisors and SkyBridge Capital, spearheaded by former White House Communications Director Anthony Scaramucci, declare their Bitcoin exchange-traded fund (ETF) application as abandoned.
This regulatory directive, issued on Wednesday, underscores the procedural implications stemming from the lack of responsiveness on the part of First Trust SkyBridge Bitcoin ETF to prior communications from the SEC.
ETF Application Update: First Trust and SkyBridge Directed to Abandon Registration
The SEC’s instruction to First Trust Advisors and SkyBridge Capital to declare their Bitcoin ETF application as abandoned sheds light on the regulatory hurdles encountered by cryptocurrency-focused financial instruments.
Despite initially filing for a Bitcoin ETF in March 2021, the application faced rejection in January 2022, aligning with the fate of numerous other similar proposals. Intriguingly, the firms opted against resubmitting their application following the SEC’s approval of BlackRock’s bitcoin ETF, even after revising their submission in light of regulatory feedback.
Will never understand this move…
IMO, could have charged fairly significant premium to market & still would have vacuumed-up assets.
— Nate Geraci (@NateGeraci) March 13, 2024
First Trust and SkyBridge’s Strategic Decision Raises Questions
Eric Balchunas, an ETF analyst at Bloomberg, voiced scepticism regarding the rationale behind First Trust and SkyBridge’s decision not to refile their application post the approval of BlackRock’s ETF.
In a post on X, Balchunas highlighted the missed opportunity for First Trust to capitalize on the momentum in the aftermath of BlackRock’s success. The industry observer speculated on the potential impact of a successful launch by First Trust, emphasizing the firm’s prowess in sales and distribution.
Market Dynamics: Bitcoin ETF Options Await Approval
As Bitcoin’s price hovers around $72,000, marking a significant surge of over 50% in the past month, market observers eagerly anticipate the introduction of options trading on spot Bitcoin ETFs. The recent decision by the SEC to postpone the approval of options trading on Bitcoin ETFs filed by the Cboe Exchange and the Miami International Securities Exchange has heightened anticipation among analysts and industry stakeholders.
Prospects for Leveraged Bitcoin ETFs: SEC Review Underway
In addition to spot Bitcoin ETFs, the SEC is evaluating proposals for multiple leveraged Bitcoin ETFs, signalling continued interest in expanding cryptocurrency investment offerings. Filings from asset managers such as Direxion, ProShares, and REX Shares for leveraged BTC ETFs underscore the evolving landscape of cryptocurrency investment products.
As the cryptocurrency market evolves and regulatory frameworks mature, the potential emergence of a Bitcoin ETF liquidity crisis looms large, posing both challenges and opportunities for investors and market participants alike.
