Sources close to asset management companies seeking to launch a spot Bitcoin ETF speculate that the SEC could approve multiple applications by January 10.
As the day goes by, top asset management companies seeking to launch spot Bitcoin exchange-traded funds (ETFs) in the U.S. are confident that the Securities and Exchange Commission (SEC) will approve a series of applications by next month.
SEC Faces January 10 Deadline
Sources closer to these asset management companies told Fox Business that the latest guidance from SEC officials indicates that the regulator could greenlight a spot Bitcoin ETF by January 10, 2024.
It bears mentioning that January 10 is the deadline when the SEC is required to accept or deny the spot Bitcoin ETF application filed by Cathie Wood’s Ark Investment in collaboration with 21 Shares.
For context, Ark Investment is the first company to seek the SEC’s approval for a spot Bitcoin ETF during this year’s batch of applicants.
Since Ark Investment applied to launch a physically-backed Bitcoin ETF, other top money management firms, like BlackRock and Grayscale, have also filed similar applications.
Even though the upcoming January 10 deadline relates to Ark Investment’s application, sources closer to these asset management companies reveal that the regulator could approve several applications at once on or before this date.
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Benefits of a Spot Bitcoin ETF
If this speculation becomes a reality, it could bolster the widespread adoption of crypto in the United States. Additionally, investors would have greater exposure to the world’s largest cryptocurrency by market cap compared to the previously approved futures Bitcoin ETF.
Instead of purchasing Bitcoin from an unregulated exchange, a spot Bitcoin ETF will allow U.S. investors to gain exposure to BTC by acquiring an ETF tied to the asset from a top money management company, like BlackRock.
While there are many opportunities associated with a spot Bitcoin ETF, the major downside of this product is the SEC’s unusual demands.
In recent meetings, the securities regulator asked top asset management companies to implement the “cash create” for the Bitcoin ETF instead of the conventional “in-kind” practice.
For “cash create” transactions, market makers are required to exchange bitcoin for cash for every ETF transaction. However, the in-kind requirement allows market makers to exchange Bitcoin for ETF shares.
Per multiple securities lawyers, one major disadvantage of the “cash create” requirement is that investors would be required to pay tax when they exchange their BTC for cash.
BlackRock and Other Firms Intensify Efforts to Launch a Spot BTC ETF
Meanwhile, top asset management companies are intensifying efforts to roll out spot Bitcoin ETFs into the market. For instance, the world’s largest asset manager, BlackRock, has met five times with the SEC regarding its application.
Furthermore, the SEC has also had 24 meetings with these big money managers with respect to their ETF applications. These developments suggest that the SEC is working round the clock to greenlight the launch of a physically-backed ETF.
While the SEC can deny all applications, market observers speculate that the regulator will not make such a decision due to the Grayscale ruling.
In August, the U.S. Court of Appeals for the District of Columbia Circuit ordered the SEC to review its denial of Grayscale’s application to convert its Bitcoin Trust into a spot-traded ETF.
Following the ruling, the SEC has become more patient in reviewing other applications for a spot Bitcoin ETF. If the SEC denies the multiple applications for a spot Bitcoin ETF, applicants could rely on the Grayscale ruling and take legal action against the regulator.