SEC is discussing ‘technical details’ of Bitcoin EFTs ahead of approval

abdelaziz Fathi

Discussions between the U.S. Securities and Exchange Commission (SEC) and asset managers seeking to list Bitcoin exchange-traded funds (ETFs) have reportedly advanced to key technical details.

This development suggests that the SEC may be moving closer to approving these products, according to industry executives.

Thirteen firms, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, have pending applications with the SEC for ETFs that would track the price of Bitcoin. These ETFs are seen as a regulated way for investors to gain exposure to Bitcoin’s price movements.

In the past, the SEC has rejected Bitcoin ETF applications, citing concerns about investor protections. However, a court ruling in August found that the SEC was wrong to reject Grayscale’s application to convert its Bitcoin trust into an ETF. Since then, the SEC has been engaging with ETF issuers on substantive details, some of which are typically discussed near the end of the ETF application process.

Grayscale Investments CEO Michael Sonnenshein stated that that the agency’s questions indicate an eagerness to make progress on the issue. Several firms, including BlackRock and Fidelity, have filed for spot Bitcoin ETFs, and the Grayscale court decision could influence the SEC’s decision.

While the SEC’s Chair, Gary Gensler, has been critical of cryptocurrencies and cited concerns about fraud and manipulation, the increasing interest in the asset class and the involvement of legacy institutions like JPMorgan in the crypto space suggest that cryptocurrencies are here to stay.

JPMorgan Chase & Co.’s proprietary digital token, JPM Coin, is set to expand its use case by facilitating interbank transactions on Partior, a blockchain ledger developed in collaboration with DBS Bank, Temasek, and Standard Chartered. This indicates the bank’s interest in blockchain and digital assets despite its CEO Jamie Dimon’s public opposition to cryptocurrencies.

Opinions are divided on the SEC’s next steps towards crypto-based ETF proposals. Some view the regulator’s decision not to appeal in the Grayscale case as a positive sign. In contrast, others remain skeptical, hinting that SEC Chair Gary Gensler might have unforeseen plans.

While the SEC has approved investment products tied to cryptocurrency futures in the past, it has not yet given approval for a spot Bitcoin (BTC) or Ethereum (ETH) ETF on a U.S. exchange. If the commission approves a spot BTC ETF, it could proceed with approving ETFs from multiple firms simultaneously, according to Bloomberg ETF analyst James Seyffart.

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