Despite Vanguard and State Street’s decision to abstain, the SEC still faces an important deadline in early January when it must announce its decision on the first Bitcoin ETF.
Anticipation surrounding the possible approval of a spot Bitcoin exchange-traded fund (ETF) in the United States has reached a peak. But amid this frenzy, two major players in the ETF industry, Vanguard Group and State Street Corp (NYSE: STT), have conspicuously decided to sit on the sidelines.
While industry giants like BlackRock Inc (NYSE: BLK) and Grayscale Investments LLC are eagerly awaiting regulatory approval, Vanguard and State Street have taken a firm stance against joining the cryptocurrency ETF race.
Cryptocurrency ETF Positions from Vanguard and State Street
Vanguard Group, known primarily for its passive, low-cost ETFs, has made its position clear. “Vanguard has no intention of offering Bitcoin ETFs or any other cryptocurrency-related products in-kind,” the Valley Forge-based company said in a statement. Vanguard believes the investment case for cryptocurrencies is weak.”
The company argued that unlike traditional stocks and bonds, most cryptocurrency assets lack intrinsic economic value and do not generate cash flows, and that the high volatility of cryptocurrencies contradicts its goal of helping investors achieve positive real returns over the long term. .
Meanwhile, Boston-based State Street, which owns the largest commodity ETF, the $57 billion SPDR Gold Shares, took a more lenient stance. While not vehemently opposed to the idea of a cryptocurrency ETF, the company did say, “We continually evaluate our ETF lineup, but do not currently offer a cryptocurrency ETF.”
This is quite interesting considering the company’s expertise in managing SPDR Gold Shares, especially considering that Bitcoin is often referred to as “digital gold.”
It’s worth noting that this isn’t the first time Vanguard and State Street have decided to sit on the sidelines during a market hype cycle. In 2020, both companies declined to enter the realm of active, opaque ETFs (ANTs), which were initially expected to accumulate up to $7 trillion in assets.
The skepticism shown by Vanguard and State Street appears to be justified, as three years later ANT has fewer assets than initially expected.
Expectations for Spot Bitcoin ETF
Despite Vanguard and State Street’s decision to abstain, the Securities and Exchange Commission (SEC) faces an important deadline in early January when it must announce its decision on the first Bitcoin ETF.
Negotiations between the SEC and ETF applicants have entered a critical phase, raising the odds of potential approval, according to a recent report from Coinspeaker. Thirteen companies, including BlackRock, Grayscale Investments, ARK Invest and Invesco, are awaiting the SEC’s decision.
Grayscale CEO Michael Sonnenshein expressed optimism about recent talks with the SEC. He noted that the SEC’s questions signal its eagerness to make progress on this issue. Notably, Grayscale scored a significant legal victory last August when three judges ruled that the SEC must reevaluate its application for a spot Bitcoin ETF.
While Grayscale and others are optimistic about the SEC’s signals, SEC Chairman Gary Gensler remains a well-known cryptocurrency skeptic. The SEC’s decision not to appeal the August ruling could signal final approval, but the timeline remains uncertain.
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