Learn about the Bitcoin ETF approval process: How does it work? Who is responsible?

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Originally written by Sean Stein SmithCompiled by Luffy, Foresight NewsThe listing of a Bitcoin spot ETF has been eagerly awaited by many individual and institutional investors, but how exactly does the process work?When the news of BlackRock's filing for a spot Bitcoin ETF application with the U.S. Securities and Exchange Commission (SEC) broke, the cryptocurrency market almost unanimously agreed that this was a good thing. While some may question the entry of traditional financial institutions into cryptocurrency, the reality is that mainstream adoption of cryptocurrencies requires the involvement of these institutions.The enthusiasm for Bitcoin spot ETF applications has surpassed multiple other similar applications submitted recently. On October 16, with the news of the approval of the BlackRock ETF, Bitcoin briefly exceeded $30,000; When the news turned out to be fake, the price quickly fell back to the previous level. Clearly, attitudes and sentiment around crypto assets have shifted to institutional players, and the almost 100% success rate of BlackRock's previous ETFs continues to bring optimism to the market.That's all well and good, but investors may be wondering how the ETF process works, who is in charge, and why it's so controversial.## How ETFs are submittedConsidering that Bitcoin ETFs have been rejected and delayed by the SEC on several occasions, the way ETFs are submitted may seem like a confusing process, but the process has been successfully completed thousands of times, summarized below. First, a potential ETF manager, known as a sponsor, submits a plan to the SEC to create an ETF. This is where the Bitcoin ETF process is put on hold because the SEC keeps rejecting these proposals. In the case of recent applications, such as those filed by BlackRock, the sponsor and authorized participant (usually a large institutional investor) are likely to be the same entity. Suppose the application proceeds from this point onwards, authorizing participants to begin acquiring the underlying assets, placing those assets in trusts, and then using those assets to form the creation units that create the ETF.It sounds like a complicated process, but the fact that there are nearly 3,000 ETFs in the U.S. with assets of nearly $10 trillion illustrates how unusual it is to firmly reject a Bitcoin ETF application.## How a Bitcoin spot ETF differs from a trustSpot ETFs have some key differences compared to trust products such as Grayscale Bitcoin Trust Products. First, trust products usually cannot redeem the underlying assets, which explains why the price of each underlying asset (Bitcoin) can be very different from the trust product itself. Instead, spot ETFs operate as open-ended fund systems with greater flexibility in issuing new shares, allowing them to better track movements in the spot price of Bitcoin. In addition, spot ETFs can provide investors with better liquidity and tax treatment, further highlighting the attractiveness of these instruments to a wide range of investors.## Who approves the ETFETFs are subject to SEC approval. Since its initial launch, the SEC has approved thousands of ETF offerings, which is why frustration over the lack of Bitcoin spot ETFs has been steadily increasing. While other ETFs with relatively exotic underlying assets and business models have been approved, the SEC under Gary Gensler remains adamantly opposed to approving the creation of spot Bitcoin ETFs, despite mounting pressure from industry and lawmakers.## Why there is no Bitcoin spot ETFAs for why there is no spot Bitcoin ETF in the US market, the answer may vary depending on the respondent. In its official comments and statements, the SEC stressed that since Bitcoin is a volatile asset, the crypto industry is rife with fraud and abuse, and other investor protections have not yet been introduced, the crypto market is not mature enough to offer investors the underlying assets of ETF products.On the other hand, many cryptocurrency proponents believe that the lack of spot ETF offerings is a testament to the anti-crypto and anti-Bitcoin stance that some US policymakers seem to have embraced. Not surprisingly, with the SEC filing a series of enforcement actions and lawsuits against companies operating in the space, the SEC has also proven unwilling to allow new cryptocurrency or bitcoin products to enter the market.As the potential of spot Bitcoin ETFs continues to increase, and frankly, it looks higher than ever, investors and entrepreneurs should understand how the ETF process works, who is involved, and why this process takes so long.