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- The wait for an SEC approved bitcoin ETF might be longer than most think, according to one fund provider that's been through the approval process.
- William Cai of Wilshire Phoenix doesn't expect the SEC to approve a bitcoin ETF until 2022 or 2023.
- "A bitcoin ETF is not on his top priority list as far as we can see," Cai said, referring to SEC chief Gary Gensler.
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Anticipation for a SEC-approved bitcoin ETF is high, but investors shouldn't hold their breath as it may still be years away from becoming reality in the US.
That's according to Wilshire Phoenix co-founder William Cai, who has first-hand experience in dealing with the SEC and its bitcoin ETF approval process.
Cai told Insider that he doesn't expect the SEC to approve a bitcoin ETF until 2022 or 2023, even as more and more fund providers rush to submit their own applications with the regulator.
There are now more than 10 bitcoin ETF applications sitting with the SEC, with Cathie Wood's Ark Invest the latest fund provider to submit its own application.
"We think they're all going to get stuck," Cai said.
The SEC's rejection of the Wilshire Phoenix bitcoin ETF application in February 2020 gave the fund provider insight into what's holding up the agency in approving a highly-sought after crypto ETF in the US.
"The major thing is manipulation, and they're focused on the cash market, [which] is not regulated and does not trade on regulated exchanges," Cai explained. A cash market is a marketplace in which the commodities or securities purchased are paid for and received at the point of sale.
The SEC is also concerned that cryptocurrencies are a relatively new asset class, and are still in the process of maturing, according to Cai. Bitcoin was created in 2009.
Even though Wilshire Phoenix worked on its bitcoin ETF application when Jay Clayton was Chairman of the SEC, Cai is seeing the same comments pop up in bitcoin ETF extension letters under current SEC Chairman Gary Gensler.
"I've seen nothing that suggests there's been a switch in their thinking," Cai said.
"Once it became more clear that Gensler was going to be [SEC chairman], to us it was even more of the case that [a bitcoin ETF approval] wasn't going to happen," Cai said.
Part of Cai's view comes from his experience as a trader at JPMorgan when Gensler was head of the CFTC. "He came in, and he totally regulated, to the surprise of a lot of people. He was a really strict, but fair regulator," Cai said.
Gensler's current agenda at the SEC also means bitcoin is not a top priority for him for now, according to Cai.
"Gensler has a big item agenda on his plate already, between ESG, Robinhood and meme stocks. A bitcoin ETF is not on his top priority list as far as we can see," Cai explained.
Still, while Cai is not hopeful that a bitcoin ETF will be approved by the SEC anytime soon, it will eventually happen.
"We believe a bitcoin ETF is good for the market, and it is going to happen," Cai said, comparing the struggles faced by early bitcoin ETFs to the first gold ETF, which sat in limbo for a while before it was approved by the SEC in 2004.
In the meantime, Wilshire Phoenix is working towards receiving approval for a bitcoin trust that will likely trade on the OTC markets and compete with the popular Grayscale Bitcoin Trust.