- The US is on the verge of possibly approving a spot Bitcoin ETF, with a key deadline set by the SEC for Dec. 29.
- Applicants are required to file final amendments and establish a cash-create redemption model, a preferred SEC approach.
- The outcome will determine the first wave of potential spot BTC ETF approvals, expected early next year.
As the clock ticks towards a pivotal moment in the cryptocurrency world, the spotlight turns to the US Securities and Exchange Commission (SEC) and its set deadline of December 29. This date marks a critical juncture for the hopeful applicants of a spot Bitcoin (BTC) exchange-traded fund (ETF).
The Push for a Spot Bitcoin ETF
The journey to this moment began with the SEC’s announcement last week, outlining specific requirements for spot Bitcoin ETF applicants. This included the necessity of filing final S-1 amendments and signing an agreement with an authorized participant (AP). Moreover, the SEC emphasized its preference for the cash-create redemption model, a methodology that contrasts with the in-kind creation process prevalent in most existing ETFs.
This shift towards a cash-create model stems from the SEC’s intent to minimize intermediary access to actual Bitcoin in the redemption and offering processes. The rationale behind this approach is to reduce the number of hands dealing with the physical Bitcoin, thereby tightening control and possibly mitigating risks like money laundering.
The Current Landscape and Analyst Insights
As of December 22, the race among the 14 applicants saw a divide, with half adhering strictly to the cash-create model and the others incorporating both cash-create and in-kind models in their filings. Eric Balchunas, a senior ETF analyst at Bloomberg, sheds light on the SEC’s strategy, explaining the commission’s preference for a more closed system with limited intermediaries handling the actual Bitcoin.
With the deadline approaching, speculation mounts on which applicants will emerge in the anticipated first wave of approvals, likely in early January. The recent amendment filing by ARK and 21Shares, notably lacking the specific name of an AP, adds to the suspense. This omission underscores the uncertainty still hovering over the process as the final amendments and agreements are awaited.
Anticipation and Uncertainty
The decision on these applications is more than just a regulatory hurdle; it symbolizes a significant step for the cryptocurrency market in the United States. If approved, these ETFs could pave the way for broader acceptance and integration of cryptocurrencies into mainstream finance. However, the outcome remains uncertain, with the industry and investors eagerly awaiting the SEC’s response to these groundbreaking applications.