In the fast-paced pursuit of a spot Bitcoin exchange-traded fund (ETF), contenders find themselves racing against a stringent deadline imposed by the United States Securities and Exchange Commission (SEC). Set for December 29, the agency’s deadline for finalizing S-1 amendments has created a sense of urgency among applicants, according to reports from Reuters, citing public memos and individuals familiar with the SEC’s discussions.
SEC announces deadline for ETF application updates
A crucial meeting unfolded on December 21, where its officials engaged with representatives from at least seven firms eyeing the launch of spot Bitcoin ETFs in the early months of 2024. Among the prominent attendees were representatives from industry giants like BlackRock, Grayscale Investments, ARK Investments, and 21 Shares. The meeting also included participants from potential listing exchanges, such as Nasdaq and the Chicago Board Options Exchange, along with legal representatives and issuers.
During these discussions, the agency made it clear that firms failing to meet the December 29 deadline would not be part of the initial wave of spot Bitcoin ETF approvals anticipated in early January. Breaking the news, Fox Business journalist Eleanor Terrett confirmed the December 29 deadline for final S-1 amendments. Terrett relayed the agency’s message that applications fully completed and submitted by the specified date would be considered in the first wave of evaluations. Notably, filings referencing in-kind creation would face rejection, underlining the SEC’s emphasis on certain regulatory criteria.
Strategic maneuvers and regulatory hurdles
A notable development in this race has been the swift updates made by multiple spot Bitcoin ETF applicants to incorporate the cash redemption model, replacing in-kind redemptions that involve non-monetary payments like Bitcoin. Beyond the cash-only requirement, the SEC is reportedly seeking explicit identification of authorized participants (AP) in the filings. According to Eric Balchunas, an ETF analyst at Bloomberg, securing the AP agreement is the final hurdle for spot Bitcoin ETF approval.
Balchunas, in a social media post, highlighted that the AP agreement, coupled with a cash redemption model, significantly contributes to the likelihood of approval. As of December 22, however, none of the spot Bitcoin ETF filers had finalized the AP agreement. Still, seven firms had shifted exclusively to the cash redemption model, indicating a strategic pivot in response to regulatory considerations. Despite the flurry of last-minute updates and adjustments by various firms vying for a spot Bitcoin ETF, Bloomberg analysts maintain their confidence in the SEC’s approval of the first spot Bitcoin ETFs by January 10.
The regulatory landscape governing cryptocurrency-related financial products remains dynamic, influencing the trajectory of these innovative investment instruments. The decisions made by the SEC in the coming weeks are poised to have a significant impact on the broader adoption and acceptance of cryptocurrency within traditional financial markets. Investors and industry participants are keenly watching these developments, recognizing the potential for spot Bitcoin ETFs to open new avenues for cryptocurrency investment.
