Issuers eye SEC’s green light for first spot bitcoin ETF by Jan 10

abdelaziz Fathi

The United States Securities and Exchange Commission (SEC) has set a firm deadline of December 29 for applicants seeking to launch spot Bitcoin exchange-traded funds (ETFs).

This deadline is critical for issuers seeking to be part of the first wave of potential spot Bitcoin ETF approvals in early January.

According to a Reuters report, which references public memos and sources familiar with the matter, SEC officials met last week with representatives from several firms, including BlackRock, Grayscale Investments, ARK Invest, and 21 Shares. The meeting also included representatives from Nasdaq and the Chicago Board Options Exchange, along with lawyers and issuers involved in these ETFs.

At these meetings, the US top watchdog warned that only applications fully completed and filed by the deadline would be considered for the initial round of approvals. Fox Business journalist Eleanor Terrett, one of the first to report on this deadline, highlighted that the SEC is particularly focused on filings that adhere to the cash redemption model, rather than in-kind redemptions which involve non-monetary payments like Bitcoin.

This shift to a cash redemption model, replacing in-kind redemptions, has been a major change for many applicants. The SEC is also reportedly insisting that Bitcoin ETF filers name their authorized participants (AP) in their submissions.

Bloomberg ETF analyst Eric Balchunas also pointed out that securing an AP agreement, along with the shift to cash redemptions, could be the final hurdles to obtaining approval for spot Bitcoin ETFs. As of December 22, none of the applicants had an AP agreement in place, though seven firms had already switched to a strictly cash redemption model.

Bloomberg analysts assessed a high likelihood of 90% that spot Bitcoin ETFs will receive approval around January 10, 2024. However, Seyffart clarified that this probability relates specifically to the 19b-4 applications. For an ETF to be launched, a separate Form S-1 also needs to be approved.

Earlier in November, the SEC opted to extend the decision-making timeline for the proposed Hashdex Nasdaq Ethereum ETF, which aims to include both spot ether and futures contracts. The agency cited the need for additional time to thoroughly assess the proposed rule change and related concerns.

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