The United States Securities and Exchange Commission (SEC) has set a firm deadline for applicants seeking to launch spot Bitcoin exchange-traded funds (ETFs). These applicants must submit their final S-1 amendments by December 29, a move that signals the SEC’s increasing engagement with cryptocurrency products.
This decision was reported by Reuters, following memos and discussions with individuals privy to the SEC’s plans. On December 21, SEC officials held discussions with representatives from at least seven companies aspiring to introduce spot Bitcoin ETFs in early 2024. Among these were key players in the investment world, such as BlackRock, Grayscale Investments, ARK Invest, and 21 Shares.
The meetings also included exchanges like Nasdaq and the Chicago Board Options Exchange, alongside lawyers and issuers, focusing on the future listing of these products. This collaboration underscores the growing mainstream interest in cryptocurrency-based financial products.
Impact on Applicants and Future Prospects
The SEC’s directive is clear: any issuer failing to meet the December 29 deadline will be excluded from the first batch of potential spot Bitcoin ETF approvals, anticipated in early January. This announcement has prompted a flurry of activity among filers, with many rushing to update their filings to align with the SEC’s requirements.
Fox Business journalist Eleanor Terrett initially broke the news of this deadline. Terrett highlighted that the SEC is prioritizing applications completed and filed by the deadline. Moreover, the SEC has specified that applications proposing in-kind creation, involving non-monetary payments like Bitcoin, will be rejected.
Adapting to these regulations, multiple spot Bitcoin ETF filers are transitioning to a cash redemption model, moving away from in-kind redemptions. This shift is a strategic response to the SEC’s stipulations and reflects a broader trend toward integrating cryptocurrency with traditional financial models.
Another critical requirement from the SEC is for Bitcoin ETF filers to identify their authorized participants in their submissions. Bloomberg ETF analyst Eric Balchunas pointed out that this AP agreement, coupled with the move to cash creation, is key to approval. However, as of December 22, none of the applicants had finalized their AP agreements, though seven firms had already switched to a strictly cash redemption model.