According to Blockworks, CBOE Digital President John Palmer believes that the potential approval of a spot bitcoin ETF could expand the ecosystem for institutions and retail investors. Palmer said that the approval would pave the way for pension funds and RIA-based funds to invest in a spot Bitcoin ETF, where they may not have access today. He also noted that potential ETF approvals could change how institutions approach derivatives, such as options and futures contracts. As the ecosystem evolves, institutional players will increasingly rely on derivatives to hedge their risk.
Palmer does not think that the breakdown will be solely institutions, but rather a mix of institutional and retail investors. He believes that institutions will lead the way with spot bitcoin ETF-involved participants using hedging tools, but retail investors will also seek these opportunities. Overall, ETFs provide a broader ecosystem for both institutions and retail investors, according to Palmer.
The US Securities and Exchange Commission (SEC) is expected to make a decision on potential spot bitcoin ETFs by January 10. In anticipation of the new year, several potential issuers submitted fresh amendments to their S-1s, with firms like BlackRock disclosing authorized participants. As previously reported by Blockworks, the inclusion of authorized participants is one of the details the SEC is looking for ahead of potential approval. Bloomberg Intelligence analyst Eric Balchunas wrote in a note at the end of December that the SEC is ready to approve spot bitcoin ETFs if they have clear language around cash-only creations and a signed agreement with an authorized participant.
