Financial Advisors Are Still Skeptical SEC Approves Bitcoin ETF, Bitwise Says

About 40% of financial advisors said they’re confident that a Bitcoin ETF will be available to American investors in 2024—the rest aren’t so sure, according to a poll by Bitwise.

It’s an interesting outcome, given that most market observers believe the SEC’s blessing for a Bitcoin ETF is likely a foregone conclusion. It’s a matter of when, not if, as crypto giant Grayscale wrote in early December. Yet most professionals charged with the task of advising clients on their investments aren’t so confident, Bitwise says.

The survey also found that even if the majority of advisors don’t think it’s likely a Bitcoin ETF will be approved this year, 88% of respondents interested in purchasing Bitcoin on behalf of their clients are waiting for an ETF to be available.

A spot Bitcoin ETF would give investors a way to add Bitcoin exposure to their portfolios without actually buying and holding Bitcoin. That means they’d get all the benefits of the market without the overhead, like figuring out how to use a hardware wallet or private keys.

About 6 in 10 of the people surveyed said that clients have been dabbling in crypto outside of their relationship with financial advisors—which Bitwise said is a promising sign for firms considering whether to make crypto products available.

The survey also found that the number of clients allocating funds in crypto has fallen slightly, down to 11% in 2023 from 15% in 2022 and 16% in 2021. But that’s still higher than it was in 2020 and 2019, when less than 10% of clients wanted a portion of their portfolio in crypto.

Keep in mind: Bitwise isn’t just idly asking about the odds that a Bitcoin ETF gets approved for trading in the states. The company has some skin in the game. It first filed its application to register the Bitwise Bitcoin ETF Trust with the Securities and Exchange Commission in 2019, but was rejected.

Bitwise then refiled an application in 2021, only to be turned down again. But the company is hoping this third time will be the charm. The firm publicly took issue with the SEC’s rejections in September, amended its application, and refiled in November 2023. Among other changes, it will now be called the “Bitwise Bitcoin ETF.”

Bitwise and VettaFi collected responses from 437 financial advisors between October 20 and December 18. Parsing that much survey data and turning it into a polished report takes a lot of time—hence the results being published a few weeks after the last response came in.

Since the survey wrapped up, more details have leaked about what the SEC wants to see from applicants before it feels comfortable approving a Bitcoin ETF to trade. The latest—just before Christmas—was that applicants would need to disclose authorized participants in their S-1 registrations and a strong preference for creation and settlement of shares happening in cash, not in Bitcoin.

Most of the major applicants, like BlackRock, Fidelity, and Cathie Wood’s Ark, have since updated their applications to address authorized participants. And earlier today, Bitcoin ETF contenders Grayscale, Ark, VanEck, and Valkyrie filed notice with the SEC that they’ve each gained approval from their respective exchanges, such as the Chicago Board Options Exchange (Cboe), to begin trading once the regulator gives the green light.

Edited by Stacy Elliott.

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