From Musicians to Profs, Public Weighs in on ‘Spotcoin’ ETFs

Public comment on spot bitcoin ETF applications began this week with a range of individuals from self-described ex-cricket players to physics professors urging the so-called spotcoin be approved. 

“Bitcoin Spot ETFs should be approved en masse,” wrote Erica Schmidt, who described herself as “average American” on the Securities and Exchange Commission’s comment page for Fidelity Investment’s Wise Origin Bitcoin Trust application. “Allowing the American public to invest in and hold crypto assets via regulated entities is much safer than them being held in offshore exchanges.” 

The comments come as applications to issue exchange-traded funds based on the price of bitcoin were added to the Federal Register, the so-called “Daily Journal of the United States Government,” this week by the SEC. This kicks off a 45-day review period that may be extended to 90 days, as well as a 21-day public comment period. 

Spot Bitcoin ETF Approval

Anticipation for approval of a spot bitcoin ETF has been gaining, with the resubmission in recent weeks of applications from firms including BlackRock Inc., Invesco, WisdomTree Inc. and others. Those firms resubmitted to address SEC concerns that a spot bitcoin ETF would be vulnerable to fraud by including so-called surveillance agreements designed to add transparency to transactions. 

Cathie Wood’s ARK Investment Management resubmitted an application with 21Shares in April to launch the ARK 21Shares Bitcoin ETF, which would track the performance of the S&P Bitcoin Index. 

Much of the impetus to refile spot bitcoin ETF applications comes from Grayscale Investment’s lawsuit against the SEC over the regulatory body blocking the firm from converting the Grayscale Bitcoin Trust into an ETF. Judges at the D.C. Circuit Court of Appeals may issue a ruling any day on that case. A Grayscale victory would open the door to approval of a spot bitcoin ETF, first sought in 2013. 

Public Weighs In on 'Spotcoin'

Public commenters mixed pleas for approval with frustration over delays. 

“It makes no sense of the SEC to have approved futures bitcoin ETF but to deny spot ETFs, based on the assumption there may be fraud in the underlying spot, but not in the futures price,” wrote John Rundle, who said he’s a physics professor at University of California. “If there is fraud in the spot price, there will be fraud in the futures contract price.” 

A commenter named Michael McGinley, who said he is working in Web3, sounded an optimistic note, writing that such a fund “could spur wider adoption of cryptocurrencies, aligning with global digitalization trends and showcasing U.S. commitment to financial and technological innovation.” 

Nasser Hussein, who identified as a former cricket player and commentator, said he expects eventual approval. “It will just eventually become politically untenable to reject the ETFs any longer.” 

Yet not all comments supported the creation of a so-called “spotcoin.” Many see cryptocurrency as an asset laden with fraud that targets retail investors. To some, the conspiracy goes further. 

“A cartel of organized crime and money-launders actively manipulate the price of Bitcoin through the use of Tether and other crypto-ponzi schemes,” said a commenter under the name Joseph. “To approve an ETF or any other indexed-Bitcoin product would be a disservice to the public.”  

Contact Lucy Brewster at [email protected] or on Twitter at @lucyrbrewster