SEC Extends Decision Deadline for Invesco Galaxy Spot Ethereum ETF to 2024; Major Accounting Rule Change to Fuel Increased Corporate Bitcoin Adoption; Coinbase Unveils International Spot Crypto Trading for Institutional Investors
The US Securities and Exchange Commission (SEC) has announced a delay in its decision on whether to approve or disapprove a spot ethereum (ETH) exchange-traded fund (ETF). In a release issued on 13 December, the SEC said it would extend the review period for a proposed rule change that would allow the Cboe BZX Exchange to list and trade shares of the Invesco Galaxy Ethereum ETF.
This proposed spot crypto-focused investment vehicle is just one of several under review by the commission. To date, the SEC has not approved an ETF with direct exposure to bitcoin or other cryptocurrencies.
According to the notice, the initial 45-day period for the proposed rule change would have ended on 23 December 2023. However, the Commission has decided to extend this timeframe, pushing the deadline for a decision further into 2024.
In September, Invesco and Galaxy Digital submitted the application for the spot ETH ETF and reactivated their application for a spot bitcoin ETF in June. Speculation among experts suggests that if the SEC decides to approve a spot crypto ETF – whether focused on bitcoin or ether – it could potentially approve funds from multiple firms simultaneously.
To date, several firms have submitted applications for spot crypto ETFs, including BlackRock, Hashdex, ARK 21Shares, VanEck and Fidelity. Recent memos released by the SEC indicate that representatives from certain asset management firms have been in discussions with Commission officials regarding their respective ETF offerings over the past 30 days.
Major Accounting Rule Change to Fuel Increased Corporate Bitcoin Adoption
A major accounting rule change could pave the way for a new wave of US-based companies to add bitcoin and other cryptocurrencies to their balance sheets. The adjustment will allow companies to more accurately reflect the value of their crypto holdings, potentially encouraging wider adoption by mainstream businesses.
The CEO of bitcoin-only exchange Swan Bitcoin, Cory Klippsten, highlighted the impact of this rule change on companies such as MicroStrategy and Tesla. These companies, which previously had to report an impairment of their bitcoin holdings, will now be able to more accurately report the true value of their bitcoin investments.
The Financial Accounting Standards Board (FASB) introduced the new rules on 13 December, which will take effect in December 2024. This update will allow companies to accurately reflect the estimated market value of their crypto holdings on their books. Crucially, companies will now be able to recognise gains when holding assets, removing the previous restriction where the value of crypto could only be reduced on the books and not increased until it was sold.
Klippsten emphasised that this rule change extends beyond companies primarily focused on bitcoin, making it essential for a wider range of businesses and potentially encouraging mainstream corporate adoption. With the ability to report gains and losses, companies can strategically use bitcoin as a financial asset.
Notably, Mark Palmer, senior equity research analyst at Berenberg Capital, pointed out in a note on 6 September following the FASB’s approval that crypto-holding companies could eliminate the negative optics associated with impairment losses under the previous rules, potentially changing the landscape for corporate engagement with cryptocurrencies.
Coinbase Unveils International Spot Crypto Trading for Institutional Investors
Cryptocurrency exchange Coinbase has announced that institutional investors outside the United States can now access spot crypto trading services on its international platform. In a statement released on December 13, Coinbase revealed that institutional clients based abroad will have the capability to trade Bitcoin (BTC), Ethereum (ETH), and USD Coin (USDC).
The services are scheduled to launch on December 14, with plans to later expand to include retail investors, additional tokens, and features facilitating new trading strategies and improved capital efficiency.
The decision to offer these services internationally comes in response to the cautious approach adopted by some asset issuers and members of the crypto community towards engaging with U.S. exchanges. Coinbase acknowledges the evolving and uncertain regulatory landscape in the United States as a factor influencing this hesitation.
It’s worth noting that Coinbase is currently facing a lawsuit filed by the US Securities and Exchange Commission (SEC) in June, alleging that the platform is operating as an unregistered securities exchange, broker and clearing agency. This legal scrutiny is in line with a wider trend, as other US exchanges such as Binance and Kraken are also facing enforcement actions from the SEC or the Commodity Futures Trading Commission, or criminal charges from the Department of Justice.
Coinbase first launched its International Exchange in May, starting with BTC and ETH perpetual futures trading for institutional investors. In September, the exchange announced plans to extend similar services to retail traders.
In the US, Coinbase’s Stand With Crypto initiative has been engaging with potential voters ahead of the 2024 elections. On 11 December, the organization hosted a presidential forum in which three candidates from opposing political parties discussed crypto and blockchain-related issues.