Crypto experts are hopeful a spot bitcoin ETF could arrive as soon as this year.
The optimism comes on the heels of the Securities and Exchange Commission approving an application for the Teucrium Bitcoin Futures ETF earlier this month. The fund was filed under the Securities Act of 1933, instead of the Investment Company Act of 1940, which other future bitcoin funds like Grayscale's Bitcoin Futures ETF have used.
"From the SEC standpoint, there were several protections that 40 Act products have that 33 products don't have, but never ever did those protections address the SEC's concern over the underlying bitcoin market and the potential for fraud or manipulation," Grayscale Investments CEO Michael Sonnenshein told CNBC's "ETF Edge" last week.
"So the fact that they've now evolved their thinking and approved a 33 Act product with Teucrium really invalidates that argument and talks to the linkage between the bitcoin futures and the underlying bitcoin spot markets that give the futures contracts their value."
Some of the protections include an independent board, accounting and custody rules, he added.
"It really is, in our opinion, a matter of when and not if" there is a bitcoin spot ETF, Sonnenshein said. "If the SEC can't look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation."
Grayscale is waiting to hear back from the SEC in early July on a decision that would convert its Grayscale Bitcoin Trust into a bitcoin ETF. If they are turned down, Sonnenshein has hinted at suing the agency.
While the Grayscale CEO has been one of the loudest SEC's critics, he is not alone.
The SEC is objecting on the grounds of manipulation concerns, but its specific request was to demonstrate that regulated CME markets are of significant size, Bitwise Asset Management's Matt Hougan said in the same interview.
"Bitcoin is now an institutional market. It's a market with institutional service providers, institutional investors, a large and robust regulated futures market," added Hougan, the firm's chief information officer.
"We've gotten the bitcoin futures ETF under the 40 Act. We've gotten the bitcoin futures ETF on under the 33 Act. The next step is what people actually want, which is a spot bitcoin ETF that gives pure exposure to bitcoin," he said.
ETF Trends CEO Tom Lydon points out that a growing number of financial advisors are interested in investing in a bitcoin ETF.
A 2022 Bitwise/ETF Trends Survey found that 82% of advisors prefer a spot bitcoin ETF over a futures-based alternative. The demand has also increased for bitcoin products investors can purchase on traditional brokerage platforms, Lydon said in the same panel. Right now, there's not many choices, so it's not going backward, he added.
The SEC declined to comment.