SEC Meets with Seven Bitcoin ETF Applicants as 29 December Deadline Approaches: Reuters


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Representatives from at least seven companies seeking to launch exchange-traded funds (ETFs) linked to spot Bitcoin (BTC) have met with officials from the Securities and Exchange Commission (SEC).

According to a report by Reuters, the discussions, based on public memos and insights from sources familiar with the matter, revealed that the SEC instructed at least two of the applicants to submit final changes to their proposals by the end of next week. 

Notable participants in the meetings included representatives from BlackRock, Grayscale Investments, ARK Investments, and 21 Shares.

The SEC is scheduled to make a decision on the joint proposal put forward by ARK and 21 Shares by January 10. 

It is widely anticipated that the SEC will approve several applications concurrently in the days leading up to the deadline. 

SEC Set December 29 as Deadline

Executives from ARK and 21 Shares that were involved in the discussions told Reuters that the SEC set a deadline of December 29 for the final updates to their filings. 

The regulators emphasized that any applicant failing to meet this deadline will not be part of the initial wave of potential spot Bitcoin ETF approvals in early January.

Fox Business was the first to report the December 29 deadline. 

Meeting memos indicate that representatives from the exchanges where the new products may be traded, such as Nasdaq and Cboe, as well as attorneys representing the applicants, were also present at the meetings.

Over the years, the SEC has rejected multiple applications for spot Bitcoin ETFs, citing concerns about market manipulation in the cryptocurrency market. 

Currently, the agency has only approved cryptocurrency ETFs linked to Bitcoin and Ethereum (ETH) futures contracts traded on the Chicago Mercantile Exchange.

However, recent developments suggest a growing inclination among regulators to approve some of the 13 proposed spot Bitcoin ETFs. 

Many believe that a significant catalyst was a federal appeals court ruling in August, which found that the SEC had made an error in rejecting Grayscale’s proposal to convert its trust into an ETF.

SEC Could Accept ETF Applications by Early 2024

According to the two executives who participated in the SEC meetings, the agency indicated that it could grant approval in the first few business days of 2024. 

Regulators would inform the issuers directly about the “effective” date on which their ETF launch request would be approved, allowing each proposed ETF to be rolled out accordingly.

When approached for comment, an SEC spokesperson stated that the agency does not provide individual filing-related comments.

In recent days, several issuers have made technical amendments to their ETF proposals. 

Both BlackRock and ARK updated their filings earlier this week to accommodate cash redemptions, a modification requested by regulators, according to individuals familiar with the matter.

Final updates to the proposals are also expected to include detailed fee information. 

ARK and 21 Shares are the only applicants that have disclosed the proposed fee for their joint ETF, set at 0.80%.

Additionally, the final changes will include information about the initial capitalization, or “seeding,” of the new ETFs. 

Sources involved in the discussions suggest that these amounts will initially be relatively small but are likely to increase significantly once the ETFs commence trading. 

The capital provided during seeding is crucial for market makers to ensure the initial market for the new ETFs remains liquid.