As approval for a spot bitcoin ETF from the U.S. Securities and Exchange Commission (SEC) looms closer and closer, research experts are still expecting the federal agency’s approval deadline to occur before January 10th, 2024 despite a series of grueling last-minute changes.
Approvals window from January 8th-10th
Bloomberg ETF analyst, James Seyffart, claimed that while many experts are still anticipating approvals to occur between January 8th and January 10th, “some issuers may be left behind.”
On December 21st, the SEC met with a number of spot bitcoin ETF candidates to further discuss the details of a potential approval, according to documents listed on the commission’s website.
Last minute changes
Seyffart’s statement comes shortly after spot bitcoin ETF hopefuls Blackrock and ARK Invest were forced to update their S-1 registration statements in order to comply with federal regulations. More specifically, the companies decided to amend their applications to follow a cash creation system over in-kind transactions at the alleged behest of the SEC.
“The SEC’s position is understandable because it will make it clear where the ETF gets its underlying Bitcoin from–the ETF will buy them, presumably from reputable exchanges, whereas if you allowed in-kind transfers you wouldn’t be able to know where the Bitcoin transferred came from,” investor and consultant, Vance Harwood posted to X.
Senior Bloomberg ETF analyst, Eric Balchunas, additionally noted that the cash-only updates were a “good sign” and the SEC and spot bitcoin ETF applicants were “getting their ducks in a row” ahead of the holidays.
However, imposing cash creation instead of in-kind transactions is a less attractive option for many investors as cash creations can be qualified as “taxable events.”
“I know for a fact ARK/21Shares did NOT want to do cash creations, even worked out a creative alt way to do in-kind,” Balchunas posted to X. “So if they are surrendering that tells you SEC not budging, debate is over, which is probably good if you’re looking for January approval.”
Mainstream adoption
If a spot bitcoin ETF is approved in January, it could signal the start of more mainstream adoption of cryptocurrencies in the U.S. However, stringent regulatory concerns have slowed up the approval process.
“Word is SEC is hard line on what they need re no wiggle room language around cash creations and an AP agreement,” Balchunas stated. “When we see S-1s w those updates can probably assume that the issuer is home free.”
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