The United States Securities and Exchange Commission (SEC) is seeking public opinion on the spot Bitcoin (BTC) ETF applications of Franklin Templeton and Hashdex. This announcement, made on November 28, marks the next phase in the scrutiny of spot BTC ETF applications filed by both companies after several weeks of uncertainty.
The SEC has requested official public comments to aid its decision on whether to approve or reject the spot ETF approval and its Forms 19b-4. Form 19b-4 is a document approved by the Trading and Markets Division of the SEC for public disclosure of certain details on an application before a potential approval.
The SEC’s Concerns
According to the release, the financial regulator is primarily concerned about market manipulation and fraud, as well as the issue of Coinbase being the custodian and price discovery efforts. Market manipulation has been a recurring issue, leading to the rejection of all previous spot Bitcoin ETF applications. However, proponents of these applications argue that similar approvals have been granted in other sectors, criticizing Gary Gensler’s approach to the market as stifling rapid development.
“The Commission is providing notice of the grounds for disapproval under consideration… the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest.”
The SEC clarified that the institution of any proceeding does not indicate a final decision on issues relating to the ETF. Rather, it is a call for interested individuals to provide comments that may contribute to a potential rule change. This standard procedure will take 35 days.
The Applications
Both applications were filed with the Commission in September amidst optimism following recent events and renewed institutional interest in the market. While Hashdex’s spot Bitcoin ETF would be traded on the New York Stock Exchange Arca, Franklin Templeton’s would be on Cboe BZX.
Comments on the applications will be due in 21 days, with a further two weeks window for rebuttals. Hashdex’s application is structured as a futures ETF, featuring spot BTC and not relying on Coinbase. The company plans to acquire BTC from other exchanges, including the CME, with a primary emphasis on pricing.
The SEC’s decision on approving a spot BTC ETF in the near future carries renewed optimism within social media spaces and is anticipated to usher in a new cycle in the market. The regulator had previously delayed making decisions on ETF applications.
