A survey of financial advisors and Grayscale comments indicate strong support for spot crypto ETFs

Fry Electronics TeamApril 11, 2022
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A survey of financial advisors and Grayscale comments indicate strong support for spot crypto ETFs

While the United States Securities and Exchange Commission (SEC) is yet to approve a spot Bitcoin exchange-traded fund, a recent Nasdaq survey suggested the offering could lead to greater adoption of crypto among financial advisors.

According to the results of a Nasdaq survey released Monday, 72% of 500 financial advisors would be more likely to invest their clients’ wealth in cryptocurrency should the SEC approve a spot crypto ETF product in the United States. For those who have already invested in crypto products, 86% of financial advisors said they plan to increase allocations within a year — about half already have investments in ETFs linked to Bitcoin (BTC) futures.

“The vast majority of advisors we surveyed plan to either start allocating to crypto or increase their existing allocation to crypto,” said Jake Rapaport, head of digital asset index research at Nasdaq. “As demand continues to rise, advisors will seek an institutional solution to the crypto issue that is now dominating client conversations.”

To date, the SEC has given no indication that it plans to approve a spot BTC ETF any time soon. The regulator has rejected several proposed exchange rule changes by New York Digital Investment Group, Global X, ARK 21Shares and others that would allow companies to list and trade shares in a Bitcoin exchange-traded fund. In each denial, the SEC said exchanges had failed to comply with the obligation under the Exchange Act and Code of Conduct to demonstrate that the ETF was designed “to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.” .

Grayscale, one of the next money managers likely to hear a regulator’s decision on its Spot Bitcoin ETF, launched a campaign in February aimed at encouraging U.S. investors to file comments with the SEC. Regulators are expected to make a decision by July on Grayscale converting its Bitcoin Trust into a spot BTC ETF for listing on the NYSE Arca, with hundreds of comments from the public as of April 4.

“Investors deserve a choice between a spot BTC ETF, and grayscale conversion would be the most effective and efficient way to do that,” said Lance Lewis of Maryland.

Bloomberg analysts Eric Balchunas and James Seyffart suggested in March that the SEC could approve a spot bitcoin ETF in mid-2023 based on a proposed amendment to alter the definition of “exchange” within the regulator’s rules. However, the Nasdaq survey of financial advisors found that only 38% thought it likely that the SEC would approve a spot crypto ETF sometime in 2022, while 31% said it was unlikely.

Related: This is why the SEC keeps rejecting spot bitcoin ETF applications

Despite uncertainty surrounding a spot Bitcoin ETF, the SEC has given the green light to investment vehicles linked to BTC futures, including offerings from Teucrium, ProShares, VanEck, and Valkyrie. Grayscale CEO Michael Sonnenshein has suggested that the regulator, which approves Teucrium’s BTC futures ETF under the Securities Act of 1933 as opposed to the 1940 one, supports the idea that “not all bitcoin futures ETFs are the same”: