In a significant development, the US Securities and Exchange Commission (SEC) has taken an unprecedented step that has raised hopes for approving Bitcoin spot exchange-traded funds (ETFs). This move comes after the SEC recently delayed applications for Bitcoin spot ETFs from major financial players like BlackRock, Fidelity, and VanEck due to last week’s looming US government shutdown.
Renowned ETF analysts, Eric Balchunas and James Seyffart, had previously estimated a 75% probability of approval for these ETFs earlier this year. However, this outlook appears to be in question given the recent delays.
Bitcoin Spot ETF Imminent? Here’s What The SEC Did
The new focal point in the quest for Bitcoin spot ETF approval is January 10, 2024, coinciding with the expiration of the last deadline for Ark Invest / 21 Shares. The Bitcoin and ETF community is closely watching to see if the SEC will approve this. Remarkably, the SEC has offered an encouraging signal, something that has not been seen in the long history surrounding the approval of a spot ETF.
Eric Balchunas, senior ETF analyst for Bloomberg, drew attention to this development in a recent tweet. Balchunas tweeted in response to another X (formerly Twitter) user who wrote, “Rumors from the ETF guys @EricBalchunas – SEC are bringing in relevant parties for meetings. This hasn’t happened before.” Balchunas revealed:
Yes, while the SEC delayed spot bitcoin filings last week, they also sent the issuers comments to address their S-1 filings (related to plumbing, legal). This is a break from the typical pattern of delay, delay, radio silence then denial. A welcome sign IMO although the timeline is unclear.
In response to inquiries about what “plumbing” means in the context of ETFs, Balchunas clarified, “the creation redemptions process, custody, legal liability – stuff like that.” ETF “plumbing” essentially encompasses the operational and technical infrastructure that underpins ETFs, including processes related to creation and redemption mechanisms, custody of assets, and legal aspects. These elements are crucial for the efficient functioning of ETFs and maintaining their price alignment with the assets they track.
Another Reason To Be Bullish
Furthermore, the SEC is set to provide another reason that could increase the chances of Bitcoin spot ETF approvals. The SEC is expected to approve nine Ethereum futures ETFs today, effectively removing its ability to deny Bitcoin spot ETFs while still allowing Ethereum futures ETFs. Previously, it was believed that the SEC might take this step because it was the only way to justify that the underlying Bitcoin market is manipulated and inadequately regulated.
However, Nate Geraci, President of the ETF Store and host of the ETF Prime podcast, offered an alternative perspective. Geraci noted, “If the SEC allows ETH futures ETFs to launch, we have to assume forcing the closure/delisting of BTC futures ETFs is off the table… Fascinated to see the SEC’s response to the Grayscale court ruling. The only options are to allow spot BTC ETFs or find another reason to deny (custody?).”
In conclusion, these recent developments indicate a pivotal moment in the ongoing effort to secure regulatory approval for Bitcoin spot ETFs in the United States. While the outcome remains uncertain, the SEC’s recent actions have injected fresh hope, suggesting that approval may be within reach.
BTC traded at $28,343 at press time, up 4.4% in the last 24 hours.
Featured image from Shutterstock, chart from TradingView.com