SEC delays decision on spot bitcoin exchange-traded funds. What that means for investors



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Even as the Securities and Exchange Commission delays a decision on several applications for the first spot bitcoin exchange-traded fund, many in the crypto industry are still feeling optimistic for a future blessing from the agency.

SEC filings dated Aug. 31 indicated the agency would give itself until to mid-October to make decisions on several applications. Experts say that another extension is possible.

This update comes two days after the federal appeals court decided in favor of Grayscale, who sued the SEC over its refusal to convert Grayscale Bitcoin Trust into an ETF.

The update was released just two days after the federal appeals judge sided with Grayscale. “

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The Grayscale ruling isn’t necessarily a green light for a spot bitcoin ETF, said Bryan Armour, director of passive strategies research at Morningstar. But pending applications from Blackrock, Fidelity and others, “have increased the probability overall.”

U.S. Investors have access to Bitcoin futures ETFs that invest in bitcoin contracts or agreements to purchase or sell an asset at a later date for a pre-determined price. The long-awaited bitcoin spot ETF, however, would invest in the digital currency directly.

Spot bitcoin ETF would be a ‘watershed moment’

“I think the spot bitcoin ETF is a watershed moment for bitcoin,” said Douglas Boneparth, a New York-based certified financial planner and president of Bone Fide Wealth. He is a member of CNBC’s FA Council.

“It’s a very serious statement to see BlackRock submit that application,” he said, and many crypto advocates believe it’s the beeline for a bitcoin spot ETF product.

Limit ‘high-risk assets’ in your portfolio

A bitcoin spot ETF would provide easier access to the asset, allowing investors to buy and sell the digital currency through a brokerage account. Boneparth cautioned that “easier access to something does not mean you should jump in headfirst.” If bitcoin spot ETFs were approved, investors would treat them as any other asset. You should always do your own research and your own due diligence before taking risks with your money.

Easier accessibility to something doesn’t mean you should dive in headfirst.

Douglas Boneparth

President of Bone Fide Wealth

When investors are weighing “high-risk assets” such as bitcoin, the financial services industry may suggest limiting a portfolio to 1% to 5% exposure, Boneparth said. He limits his exposure to speculative investments, such as hedge funds, private equity and bitcoin, to between 5% and 10% of all investable assets. Johnson also recommends limiting bitcoin exposure. He said that if bitcoin prices drop by 50%, only 1% of the portfolio is lost.