The first Bitcoin spot ETF in the United States takes another step forward. The U.S. Securities and Exchange Commission (SEC) has recently been actively meeting with issuers of spot ETFs, hinting for the first time that January next year will be an important time for approval.
Background:
SEC is in a hurry! 13 Bitcoin spot ETF issuers need to complete modifications by the end of the year, with three, including BlackRock, having already submitted.
The U.S. Securities and Exchange Commission (SEC) is currently reviewing the Bitcoin spot ETF applications submitted by 13 issuers, including BlackRock. As time goes on, more news continues to emerge.
According to informed sources cited by Reuters over the weekend, SEC officials met with representatives from at least 7 issuers who hope to launch such ETFs in early 2024, and informed at least 2 companies that they need to submit final changes to their applications by the 29th. It is worth noting that executives from the two companies who met with the SEC indicated that the SEC also informed them during the meeting that any issuer who fails to complete the changes before the deadline will not become one of the potential first approved Bitcoin spot ETFs in early January.
This has raised market expectations for the probability of SEC approving the spot ETF in January.
It is understood that the representatives who met with the SEC included BlackRock, Grayscale, Ark Invest/21 Shares. The SEC will decide on January 10th whether to approve or reject the joint application from Ark Invest/21 Shares. Most issuers expect that the SEC may approve multiple applications in the days leading up to the deadline.
The final change documents from these issuers are expected to cover comprehensive details, including technical specifications, fee structures, and initial financing strategies. Ark Invest/21 Shares is currently the only issuer to disclose fee details, setting its ETF fee at 0.8%.
SEC favors cash creation/redemption mode
Meanwhile, according to Fox Business, large asset management companies are increasingly convinced that the SEC will approve the first Bitcoin spot ETF in early January. However, during a conference call with issuers last Thursday, the SEC explicitly stated that it would only consider cash creation/redemption mode, not physical creation/redemption mode.
SEC staff stated that any mention of physical creation/redemption mode must be removed from the application documents. BlackRock, which had been seeking to adopt the physical creation/redemption mode, has accepted the SEC’s insistence on cash creation/redemption mode in its updated documents.
David Weisberger, Co-CEO of CoinRoutes, stated that from all the recently submitted amended S-1 documents, it is evident that the SEC is requiring cash creation/redemption mode, which seems to be the final hurdle before related ETFs are approved. Although the approval time for ETFs is uncertain, it is expected that they will be approved before the January 10th deadline next year.
Bloomberg analyst: Confirming AP agreements and cash creation are key
Bloomberg ETF analyst Eric Balchunas also added over the weekend that the S-1 document updates required by the SEC include an important change: the latest snapshot of their “ETF Cointucky Derby” added a column for “AP agreements”. This change is due to the SEC’s desire to confirm detailed information about authorized participants (APs, i.e. underwriters) in upcoming S-1 document updates (i.e. within the next 10 days).
Balchunas pointed out that this requirement may be difficult for some issuers to meet and they may not be approved simultaneously. However, combining “confirming AP agreements” with “cash creation” is likely the key to formal approval.
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Tags:
SEC
Ark Invest
Bitcoin spot ETF
Cash creation
BlackRock