The long-awaited moment for the cryptocurrency industry is about to arrive.
The countdown has begun for the approval of a Bitcoin spot ETF, which many market participants have been waiting for with bated breath. It has already been two years since the appearance of a Bitcoin futures ETF. The SEC (Securities and Exchange Commission), which has continued to refuse approval, has finally succumbed to domestic and international pressure.
In this article, we will comprehensively touch upon the differences between Bitcoin spot ETFs and futures ETFs, the reasons why the SEC has continued to reject approval, the background to the change in the wind, the future schedule, and the significance of approval.
The difference between a Bitcoin spot ETF and a Bitcoin futures ETF
Before going into the background, I would like to start by explaining the difference between a "Bitcoin spot ETF" and a "Bitcoin futures ETF."
Bitcoin Futures ETF
Bitcoin Futures ETF refers to an ETF that invests in Bitcoin futures trading. A futures contract is a contract that promises to buy or sell a specific financial product at a "predetermined price" at the time of the transaction on a predetermined date. In the case of a Bitcoin ETF, the specific financial product is replaced with Bitcoin.
Bitcoin Spot ETF
A Bitcoin spot ETF is an ETF that invests directly in Bitcoin, making it possible to gain direct exposure to Bitcoin without the need to open a wallet or account at a cryptocurrency exchange.
Investment risks for both parties
There are also differences in investment risk between Bitcoin Futures ETFs and Bitcoin Spot ETFs.
Bitcoin Futures ETFs are futures transactions, so there is a certain risk of price fluctuations, such as the possibility of deviation from the market Bitcoin price. Recently, leveraged Bitcoin Futures ETFs have also appeared, and they are becoming a financial product with both advantages and disadvantages.
However, since you do not hold the actual Bitcoin, there is no possibility of suffering losses due to hacking or unauthorized leakage. Therefore, the advantage is that you can trade Bitcoin indirectly without worrying about security.
On the other hand, Bitcoin Spot ETFs are linked to the market price because you are investing in actual Bitcoin. In addition, by making it an ETF, you can indirectly buy and sell Bitcoin in the same way as financial products such as stocks, but compared to futures ETFs, it is closer to traditional cryptocurrency spot trading, so the advantage is that the risk of price fluctuations can be relatively suppressed.
However, the biggest disadvantage is still the method of storing Bitcoin and the security aspect. In the future, it is possible that trillions of dollars worth of Bitcoin will be managed, but if all of it were to be lost due to a hack or unauthorized leak, it would be a terrible tragedy. The biggest reason why the SEC has continued to reject Bitcoin spot ETFs so far has been concerns about the storage method and security aspects.
Gensler has been a constant obstacle
Until now, and even now, the current SEC Chairman Gary Gensler has been a big obstacle. Gensler was appointed SEC Chairman when the Biden administration was born in 2021. He served as Chairman of the Commodity Futures Trading Commission (CFTC) under the Obama administration, and was also deeply involved in responding to the Lehman Shock.
▶︎SEC Chairman Gary Gensler (Quote from the SEC)
Gensler, who was appointed SEC Chairman with the pretext of being “positive about crypto assets,” such as teaching classes on crypto assets and blockchain at a university, has been described by the US media as “a specialist in the financial field and a regulator who thoroughly enforces rules and management systems.”
Perhaps because he is a former CFTC employee, Gensler was in a welcoming mood when Bitcoin futures ETFs were released. However, as soon as it became a spot ETF, he began to strongly bashing it, as if he was a different person.
Gensler had previously even tried to sell himself to the major cryptocurrency exchange Binance to become an executive. I suspect he himself must have had some sort of illusion about crypto assets.
However, he was brought back to reality by the collapse of FTX last year. As proof of this, since the beginning of this year, the crackdown on crypto asset-related companies has been strengthened more than necessary. He even went so far as to say that crypto assets are "no longer needed in the United States."
The multiple factors that completed the "Gensler Siege"
In this situation, there is no way that Mr. Gensler would approve a financial product with security risks. So why has the wind changed so dramatically in the past few months? The background is the fact that they have lost a series of lawsuits.
First, in July of this year, there was a lawsuit over the cryptocurrency XRP securities issue that has been in dispute with Ripple since the end of 2020. The ruling stated that if it is sold to institutional investors, it is an "unregistered securities sale," while if it is sold to general investors who buy and sell on cryptocurrency exchanges, etc., it "does not constitute a security."
At first glance, it may seem like a draw for both sides, but for the SEC, which has been boasting about a complete victory, this result means a virtual defeat. In fact, the impression that Ripple won is more prevalent both inside and outside the industry.
In addition, the SEC recently withdrew its lawsuit against Ripple CEO Brad Garlinghouse and founder and chairman Chris Larsen. It is possible that they have been forced to give up on the pursuit, as experts have long said that "the SEC cannot expect to win."
The deciding blow was the loss of the lawsuit over the conversion of the Bitcoin mutual fund "GBTC" offered by Grayscale, a major crypto asset management company, into a spot ETF. In August, the court ruled that "the SEC's rejection of the application was whimsical and arbitrary," and ordered Grayscale's application to be reviewed again promptly.
This triggered a rise in momentum for the approval of a spot Bitcoin ETF. In fact, the result of this lawsuit is likely the background to the excitement that BlackRock's spot Bitcoin ETF, which was listed as of August, may soon be approved.
It should also be remembered that as these rulings were handed down, the wind against Gensler was growing stronger day by day.
In June, Republican lawmakers introduced a bill calling for Gensler's dismissal. One Republican lawmaker strongly criticized Gensler as "an tyrannical chairman who is not suited to the U.S. capital market." Despite being elected by a Democratic administration, Gensler is losing credibility in the political world, with some Democratic lawmakers expressing dissatisfaction.
Regarding the Bitcoin spot ETF, SEC Commissioner Hester Pierce, a cryptocurrency advocate also known as "Crypto Mom," dismissed him, saying, "We don't know why they don't approve it." In other words, Gensler is surrounded on all sides.
Gensler is currently under siege, with the judiciary, politics, and even his allies looking down on him. His sudden attempt to forcefully turn his back on cryptocurrencies has shaken the powerful authority of the SEC. This situation could be a tailwind that will support the approval of a Bitcoin spot ETF.
Of course, Gensler's wishes will not be reflected in all of the SEC's current reviews, but if the SEC were to reject the Bitcoin spot ETF application under these circumstances, not only would it face unprecedentedly strong criticism, but it would also require more detailed and accurate explanations. Gensler is now on the defensive. No matter how strong his words are, he is just a fox taking advantage of the tiger's authority.
Future developments and schedule
As for future developments, the timing of the official approval of the Bitcoin spot ETF is of interest.
There are currently 12 Bitcoin spot ETFs that have been applied for, but all of the review deadlines have been extended to January 2024 or later, except for Grayscale's re-examination. Below is the current schedule.
▶︎Bitcoin ETF review schedule (created by Iolite)
First of all, considering overseas reports and the current situation, BlackRock's Bitcoin spot ETF is still the top candidate for approval regardless of the deadline. Next in line are ETFs such as Ark & 21 Shares and Valkyrie, which were resubmitted in response to the SEC's request.
On the 26th, a Bloomberg analyst said about HashDex's application, "It's all been adjusted to match the discussions the SEC has had in the past. I don't think they can reject this," but looking at past trends, it is quite possible that the first review deadline will be extended.
Market forecasts suggest that there is a 75% chance of approval of a Bitcoin spot ETF within 2023. It is said that if it is postponed to 2024, there is a 95% chance of approval.
The current situation is somewhat similar to when the Bitcoin Futures ETF was first approved in October 2021. At the time, the entire industry was in a state of agitation, with overseas media reporting in advance that a Bitcoin Futures ETF would be approved.
The impact and significance of the approval of a Bitcoin spot ETF
The Bitcoin spot ETF, which has been rejected until now, is finally one step away from approval. This means that it is a leap forward for the cryptocurrency industry.
First of all, the fact that Bitcoin, and by extension cryptocurrencies, are on par with traditional financial assets will have a huge impact both inside and outside the cryptocurrency industry.
The fact that digital assets, which have only been around for a little over 10 years, can be traded in the same way as stocks and gold is an unprecedented innovation and has great significance in the history of cryptocurrencies. The introduction of Bitcoin futures ETFs has already expanded the window to Bitcoin, but the emergence of a spot ETF, which also carries great risks, is proof that demand for cryptocurrencies has been created and that social trust has been secured.
And the impact will be directly transmitted to the cryptocurrency market. If a Bitcoin spot ETF is approved, institutional investors' funds will flow directly into the cryptocurrency market, so there are high expectations for improved liquidity and price increases.
Galaxy Digital, a US cryptocurrency investment firm, estimates that the launch of Bitcoin spot ETF trading will lead to a 74% rise in Bitcoin prices in the first year. With huge amounts of institutional investor money moving around, this is a realistic figure.
I still remember how excited I was when Bitcoin futures ETFs were approved. I would really like to experience that same feeling of euphoria again.
Day X is fast approaching. The moment the cryptocurrency industry steps into a new phase is surely drawing near.
Images: Shutterstock, SEC
Profile
◉Shogo Kurobe He entered the cryptocurrency industry in 2018. With experience studying writing and writing novels as a student, he is involved in writing, planning and editing articles on cryptocurrency and blockchain. He was appointed deputy editor-in-chief at J-CAM Co., Ltd. in April 2022, and is currently in his current position. He launched "Iolite" in March 2023.
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MAGAZINE
Iolite Vol.14
July 2025 issueReleased on 2025/05/30
Interview Iolite FACE vol.14 Charles Hoskinson, founder and CEO of Cardano/Input Output Global
PHOTO & INTERVIEW Mariko Mabuchi
Special feature: "Considerations on cryptocurrency-related policies in Japan and the US", "Blockchain guide from Japan", "Huge position liquidation occurs at Hyperliquid! A new, unanticipated crisis in decentralized finance", "Sakana AI, a generative AI startup from Japan that is attracting a lot of attention", "Prepare for a recession: correlation between finance and anomalies"
Crypto Journey: "Web 3.0 from the perspective of the 'King of Debate'" Interview with Hiroyuki
Special series: Virtual Nishi: "Cryptocurrency market trends and key points for interpreting them"
Series: Tech and Future Toshinao Sasaki, etc.