Representatives from at least seven companies seeking to launch exchange-traded funds (ETFs) linked to spot Bitcoin (BTC) have met with officials from the Securities and Exchange Commission (SEC). The discussions revealed that the SEC instructed at least two of the applicants to submit final changes to their proposals by the end of next week [source: Reuters].
Meeting with Notable Participants
Notable participants in the meetings included representatives from BlackRock, Grayscale Investments, ARK Investments, and 21 Shares [source: Reuters]. The SEC is scheduled to make a decision on the joint proposal put forward by ARK and 21 Shares by January 10 [source: Reuters].
Executives from ARK and 21 Shares involved in the discussions revealed that the SEC set a deadline of December 29 for the final updates to their filings. Failure to meet this deadline would exclude the applicants from the initial wave of potential spot Bitcoin ETF approvals in early January [source: Reuters].
Growing Inclination to Approve Spot Bitcoin ETFs
Over the years, the SEC has rejected multiple applications for spot Bitcoin ETFs, citing concerns about market manipulation in the cryptocurrency market. However, recent developments suggest a growing inclination among regulators to approve some of the 13 proposed spot Bitcoin ETFs [source: Reuters].
The catalyst for this shift in sentiment was a federal appeals court ruling in August, which found that the SEC had made an error in rejecting Grayscale’s proposal to convert its trust into an ETF [source: Reuters].
According to two executives present at the SEC meetings, the agency indicated that it could grant approval in the first few business days of 2024. Regulators would inform the issuers directly about the “effective” date on which their ETF launch request would be approved, allowing each proposed ETF to be rolled out accordingly [source: Reuters].
When approached for comment, an SEC spokesperson stated that the agency does not provide individual filing-related comments.
Final Updates to the Proposals
In recent days, several issuers have made technical amendments to their ETF proposals. Both BlackRock and ARK updated their filings earlier this week to accommodate cash redemptions, a modification requested by regulators [source: insiders]. Final updates to the proposals are also expected to include detailed fee information [source: insiders]. ARK and 21 Shares have disclosed the proposed fee for their joint ETF, set at 0.80% [source: insiders]. Additionally, the final changes will include information about the initial capitalization, or “seeding,” of the new ETFs. It is suggested that these amounts will initially be relatively small but are likely to increase significantly once the ETFs commence trading. The capital provided during seeding is crucial for market makers to ensure the initial market for the new ETFs remains liquid [source: insiders].
