The U.S. Securities and Exchange Commission (SEC) recently met with Fidelity to discuss the firm’s spot Bitcoin ETF application. This meeting, which took place on December 7th, involved several members of the SEC’s Division of Corporate Finance as well as representatives from CboeBZX. The primary focus of the meeting was a proposed rule change that would allow CboeBZX to list and trade shares of Fidelity’s Wise Origin Bitcoin Trust.
Fidelity’s ETF model offers exposure to Bitcoin through a structure that involves various industry participants with distinct roles. Authorized participants and broker-dealers interact with issuers and custodians to create and redeem ETF shares, facilitating market flow. Unregistered crypto affiliates hold and transfer the actual Bitcoin tied to the ETF based on creation and redemption orders. This intermediary setup enables market participants to gain price exposure without directly handling the cryptocurrency.
Advanced Talks and Rumors of Approvals
Recent reports indicate that discussions between the SEC and ETF applicants, including Fidelity, are progressing to advanced stages. These talks primarily revolve around “key technical details.” Unnamed sources, speaking on the condition of anonymity to Reuters, suggest that the SEC is likely to approve the relevant ETF applications in the near future.
The SEC has been engaging in meetings with various spot Bitcoin ETF applicants, including BlackRock, in recent weeks. During these meetings, comparisons between cash and in-kind models have been made. In November, Bloomberg ETF analyst Erich Balchunas proposed that cash models may be more suitable due to potential difficulties in executing Bitcoin transactions under current U.S. regulations. However, subsequent reports from Bloomberg ETF analyst James Seyffart indicate that some proposals may allow for both cash and in-kind options.
According to both Balchunas and Seyffart, there is an estimated 90% chance of a spot Bitcoin ETF being approved by January 2024. These estimates highlight the growing optimism surrounding the potential approval of Bitcoin ETFs by the SEC.
The recent meeting between the SEC and Fidelity concerning Fidelity’s spot Bitcoin ETF application provides further evidence of progress in the approval process. With advanced talks, comparisons between different ETF models, and optimistic estimates, the future for Bitcoin ETFs looks promising. Investors and market participants eagerly await the SEC’s decision, which could herald a new era of mainstream Bitcoin investment opportunities.
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