According to the latest reports, significant progress has been made in discussions between the U.S. Securities and Exchange Commission (SEC) and asset managers over the potential approval of the long-awaited spot bitcoin exchange-traded funds (ETFs).
SEC’s Fruitful Discussions With Spot Bitcoin ETF Contenders
The SEC, historically cautious about approving spot-based crypto ETFs, is now delving into crucial technical details with potential issuers.
According to a December 7 Reuters report citing anonymous industry insiders, the top regulator has engaged with applicants on important details such as custody arrangements, creation and redemption mechanisms, and investor risk disclosures. Notably, high-profile asset managers, including BlackRock, Grayscale, Invesco, and 21 Shares, are believed to have met with SEC officials since September.
What’s more, the report suggests that the SEC is carefully weighing the pending spot ETF applications on its desk rather than denying them outright like it has countless times in the past — often citing the possibility of Bitcoin market manipulation in its rejection of the investment vehicle. Notably, while the previous conversations focused on this manipulation concern and were mainly educational, the recent talks revolved around nuanced technical aspects, the people revealed.
Moreover, these recent meetings have involved staff in SEC boss Gary Gensler’s office — unlike in the past when the meetings were only with staff from the agency’s trading and markets and corporate finance divisions.
The report further notes that the SEC’s anti-Bitcoin ETF stance has shifted significantly following its earth-shattering loss in the Grayscale case back in August. “But after a court in August ruled the SEC was wrong to reject Grayscale’s application to convert its bitcoin trust into an ETF, the SEC has been engaging with issuers on substantive details, some of which are usually discussed near the end of an ETF application process,” as per the sources.
Spot Bitcoin ETF Approval Imminent?
Growing anticipation that the SEC might soon greenlight one or a bunch of spot bitcoin ETF filings has been a considerable factor in the bellwether cryptocurrency’s approximately 59% rally since October 1. That said, market observers have been keen for any signs of confirmation.
Purchasing and holding Bitcoin can be complicated for less tech-savvy investors. A spot Bitcoin ETF would enable everyday investors who want exposure to BTC to buy shares that closely track the crypto asset’s price.
Several Wall Street giants have applied to the SEC to release their own Bitcoin ETF to U.S. investors. BlackRock and Bitwise recently updated their applications to answer additional questions presumably asked by the regulator in earlier discussions.
The market has previously assigned a probability of about 90% that the U.S. authorities will give the regulatory nod to such a spot crypto ETF by January 10, 2024.
Reuters also recalled that ARK Invest chief executive officer Cathie Wood voiced in a Yahoo Finance interview last month, saying: “My guess is that we’ll have several ETFs approved at once, which will give investors the best opportunity to compare them.”
This heightened expectation for a spot ETF is pushing the bitcoin price higher, which recently breached the $44,000 threshold for the first time since April 2022.
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