Time and money are largely interchangeable terms. - Winston S. Churchill
Finance

US Bitcoin ETF Issuers Nearing Approval Following Advanced Talks with SEC

US Bitcoin ETF Issuers Nearing Approval Following Advanced Talks with SEC
Photo by Joel Filipe / Unsplash

Summary:

The U.S. Securities and Exchange Commission (SEC) is reportedly nearing a decision on the approval of bitcoin exchange-traded funds (ETFs), following advanced discussions with several asset managers. Industry insiders indicate that these talks have progressed to addressing key technical details, signaling a potential green light for these financial products.

Background:

  • Pending Applications: Thirteen firms, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, have submitted applications to the SEC for bitcoin ETFs. These ETFs aim to track the price of bitcoin.
  • Investor Interest: Proponents of bitcoin ETFs argue that a regulated product tied to bitcoin’s spot price offers a safer and more accessible investment option.

Developments:

  • Grayscale Court Ruling: Following a court ruling in August, which found the SEC's rejection of Grayscale's ETF application to be erroneous, the SEC began substantive discussions with issuers.
  • Discussion Focus: The talks have centered around custody arrangements, creation and redemption mechanisms, and investor risk disclosures.

Potential Impact:

  • Market Access: Approval of a spot bitcoin ETF could provide a significant gateway for investors to access bitcoin through the regulated stock market.
  • SEC Concerns: The SEC has historically been wary of bitcoin’s susceptibility to manipulation, but recent discussions suggest a shift in focus.

Timeline:

  • Deadline for Decision: The SEC has until January 10 to decide on ARK's filing, with other applications likely to follow.

Industry Perspectives:

  • Cathie Wood, ARK CEO: Expressed optimism about the likelihood of multiple ETF approvals.
  • Bryan Armour, Morningstar: Noted the chance for investors to compare several ETF options.

Meetings and Memos:

  • SEC Engagements: Public memos and sources reveal meetings between SEC staff and executives from BlackRock, Grayscale, Invesco, and 21 Shares since September.
  • Filing Amendments: Issuers like BlackRock have amended filings to reflect new details for investor protection.

SEC Stance:

  • No Public Confirmation: The SEC, including Chair Gary Gensler, has not publicly confirmed approval plans.
  • Key Considerations: Settlement mechanisms remain a major point of discussion.

Outlook:

  • Grayscale Ruling Influence: The Grayscale court decision may limit the SEC’s ability to reject the applications.
  • Market Manipulation Solutions: Issuers have proposed surveillance arrangements to address market manipulation concerns.

Conclusion:

With advanced discussions and the potential resolution of key issues, the SEC appears closer to approving bitcoin ETFs. This development could mark a significant milestone in cryptocurrency investment options, expanding access and providing regulated investment pathways for a broader investor base.

Read next