Clock Starts Ticking on Fidelity's Bitcoin ETF

The Cboe has filed an application with the Securities and Exchange Commission to list Fidelity’s Bitcoin ETF, known as the Wise Origin Bitcoin Trust, which starts the clock for an agency decision on the ETF application.

The exchange filing, known as a 19b-4 filing, was submitted May 10, after which the SEC allows 45 days for an initial review that can be extended as long as 240 days.

To date, eight Bitcoin ETF applications are pending before the SEC, and exchanges have filed 19b-4 filings for five of them. The Cboe has filed four of those 19b-4 applications, including one for the VanEck Bitcoin Trust, whose review was extended beyond the initial 45 days for at least another 45 days, to June 17.

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In its announcement to postpone that decision, the SEC said a longer time period was appropriate to provide “sufficient time to consider the proposed rule change and the comments received.” The SEC has rejected all previous cryptocurrency ETF applications, including two from VanEck, one in partnership with SolidX.

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At this point, SEC approval of any of the pending Bitcoin ETFs appears to be a long shot. Days after the SEC punted on the VanEck application, Gary Gensler, its new chairman, told CNBC that the SEC doesn’t have the authority to oversee the exchanges where cryptocurrencies trade and he would talk with Congress about creating federal oversight of this “highly speculative market” to protect investors who want to invest in it.

John Hyland, a retired ETF executive who once served as global head of ETFs at Bitwise Asset Management, which sponsors several cryptocurrency funds, told ETF.com that a Bitcoin ETF will likely not be approved before 2022, given that Congress and the Biden administration are “very much mixed on their views about crypto.”

Gensler will likely “be content to allow this to move on down the line for some time,” Hyland said.

The U.S. government is likely also concerned about the impact of a Bitcoin ETF on the dollar. “Approval of a Bitcoin ETF would give Bitcoin legitimacy, which would have implications for the U.S. dollar as a reserve currency,” said Henry Jim, editor of ETFhearsay.com and a former vice president for ETF product development at BlackRock and JPMorgan. “The only way that a cryptocurrency ETF would come to fruition in the U.S. is having cryptocurrencies regulated and under the control of the U.S.”