The Advancement of Spot Bitcoin ETFs in the United States

The Advancement of Spot Bitcoin ETFs in the United States

In recent news, conversations surrounding the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States have reached advanced stages. The U.S. Securities and Exchange Commission (SEC) has reportedly started asking detailed and technical questions to potential spot Bitcoin ETF issuers, a promising sign that pending applications may soon be approved.

The Application Process

Between June and December 2023, a total of 13 asset management firms, including industry giants such as BlackRock, Ark Invest, Invesco, Fidelity Digital, VanEck, and Franklin Templeton, have filed applications with the SEC to launch spot Bitcoin ETFs in the country. Notably, Grayscale reentered the race in August following a court order requiring the SEC to review their application to convert Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. Many sources believe that the court’s ruling in favor of Grayscale could influence the SEC’s decision on other applications.

The SEC has historically rejected spot Bitcoin ETF applications due to concerns over market manipulation. However, recent reports indicate that the regulator has started asking for detailed information, typically sought toward the end of an ETF application process. These requests cover topics such as creation and redemption mechanisms, custody arrangements, and investor risk disclosures. The frequency of information requests from the SEC has also increased, indicating an intensified level of engagement.

As conversations continue to progress, official meetings between the SEC and asset managers have evolved. Initially involving staff from the agency’s trading, markets, and corporate finance divisions, these meetings now include employees from Chair Gary Gensler’s office. This shift in engagement signals a higher level of involvement and reinforces the notion that the SEC is seriously considering the spot Bitcoin ETF applications.

To adapt to the evolving landscape, potential issuers have made adjustments to their filings to reflect new arrangements. BlackRock, Grayscale, and Ark Invest have all updated their applications to accommodate the changing regulatory environment. Nevertheless, while the crypto community eagerly awaits the SEC’s decision on Ark Invest’s filing, which is expected on January 10, 2024, there is no guarantee of approval. The SEC has not yet made any public statements about the potential approval or rejection of the firm’s spot Bitcoin ETF product.

Despite uncertainties, sources remain cautiously optimistic about the potential approval of all spot Bitcoin ETF applications by next month. The advanced nature of discussions between the SEC and issuers and the increased frequency of information requests paint a positive picture for the future of spot Bitcoin ETFs in the United States.

The advancement of spot Bitcoin ETFs signals a significant shift in the regulatory landscape. The SEC’s increased engagement and detailed inquiries indicate a more open stance towards these innovative financial products. As the discussions progress, market participants eagerly anticipate a favorable decision from the SEC, which may pave the way for increased adoption and integration of cryptocurrencies in traditional finance.


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