This article is more than three months old

Bitcoin ETF will get nod in 2023 because SEC’s Gensler ‘needs a win,’ says Galaxy’s Novogratz

Bitcoin ETF will get nod in 2023 because SEC’s Gensler ‘needs a win,’ says Galaxy’s Novogratz
Mike Novogratz, founder and CEO of Galaxy Digital, says "the American public wants" a spot Bitcoin ETF. Credit: Suzanne Cordeiro/Shutterstock.
  • SEC chief Gary Gensler could use a “win,” says Galaxy Digital’s Mike Novogratz.
  • Novogratz said the SEC could approve spot Bitcoin ETF applications before the end of the year.
  • The comments came as financial firms such as BlackRock and ARK Invest talked enthusiastically about crypto's future this week.

The US Securities and Exchange Commission is on track to greenlight a spot Bitcoin exchange-traded fund, says Galaxy Digital CEO Mike Novogratz.

“[Gary] Gensler needs a win,” Novogratz said on CNBC’s Squawk Box, referring to the SEC chair.

“It’s going to get approved,” he said of a Bitcoin spot ETF. “It happens this year in 2023.”

Galaxy Digital is a financial services firm specialising in blockchain and digital assets.

Stay ahead of the game with our weekly newsletters

ETFs offer investors an affordable and convenient way to bet on the performance of stocks, commodities, and cryptocurrencies. They also tend to be highly liquid.

The SEC, Novogratz argued, was put “on the backfoot” when a U.S. appeals court ruled against the agency in August in a lawsuit brought by digital asset manager Grayscale.

The SEC’s denial of Grayscale’s application to turn its Bitcoin Trust into a spot exchange-traded fund was “arbitrary and capricious,” the court ruled, because it was inconsistent with the agency’s treatment of similar products — namely, Bitcoin futures ETFs, which the agency greenlit in 2021.

This wasn’t the market watchdog’s only defeat. In July, a court ruled that programmatic sales of the XRP token used on Ripple’s platform were not securities transactions — contrary to what the regulator had argued.

Join the community to get our latest stories and updates

The Grayscale courtroom victory led the House Financial Services Committee to write a letter to Gensler in September, urging him to approve a spot Bitcoin ETF “immediately.”

“There’s a tremendous amount of pressure to do something that is rational,” Novogratz said. “The American public wants this.”

Galaxy Digital has partnered with Invesco to file an application for a Bitcoin ETF.

Latest developments

The deadline for the SEC to appeal the court’s Grayscale ruling passed last week without the regulator appealing it.

The regulator “must act expeditiously” in approving Grayscale’s application to convert its trust into a spot ETF, the digital asset manager’s chief legal officer Craig Salm told radio show SiriusXM on Wednesday.

“The fact that the SEC shows to ask questions is a change of behaviour,” ARK Invest CEO Cathie Wood, who has her own application underway, told CNBC on Monday. “Hopes are rising that a number of Bitcoin ETFs will be approved.”

Wood echoed “what we’ve been hearing, saying and predicting” in her interview, noted Bloomberg Intelligence ETF analyst Eric Balchunas.

BlackRock CEO Larry Fink went on Fox Business on Monday evening to say recent Bitcoin prices movements indicated a “pent-up interest” in the asset.

“We’re hearing from clients around the world about the need for crypto,” Fink said.

Tom Carreras is a Markets Correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com