The countdown to crucial deadline as 14 firms vie for approval of the Spot Bitcoin ETFs in January.
As the crypto world eagerly anticipates the potential green light for a spot Bitcoin exchange-traded fund (ETF) in the United States come January, today marks a pivotal deadline, adding intensity to the ongoing regulatory saga.
The U.S. Securities and Exchange Commission (SEC) recently declared a significant milestone, emphasizing that spot Bitcoin ETF hopefuls must submit final S-1 amendments by December 29. Alongside this, the SEC mandated agreements with authorized participants (APs) and clarification on the cash-create redemption model, setting the stage for a groundbreaking decision.
On December 29, the crypto community awaits revelations about which among the 14 spot Bitcoin ETF applicants could be on the cusp of securing initial approvals in the much-anticipated first wave, widely expected in early January.
Invesco/Galaxy is in and here's a whopper: it will be waiving fee for first six months AND for first $5b in assets, APs named as well, Virtu and JPMorgan (again lol). Another horse in. Are we having fun yet? pic.twitter.com/mDUOOSnA29
— Eric Balchunas (@EricBalchunas) December 29, 2023
According to insights from Bloomberg senior ETF analyst Eric Balchunas, the landscape has witnessed a flurry of activity related to the cash-create redemption model. By December 22, seven applicants revised their filings to embrace this model, while the remaining seven maintained a hybrid approach with both cash-create and in-kind models in their registration statements.
Balchunas explained the SEC’s rationale behind favoring the cash model, emphasizing a desire to minimize intermediaries with access to actual Bitcoin in the redemption and offering process. This approach, he noted, aligns with the SEC’s goal of establishing a more controlled and secure system with fewer intermediaries handling the tangible Bitcoin.
It's raining S-1s.. WisdomTree just in, names Jane Street as AP. Another horse makes it to starting gate. pic.twitter.com/lpDIUZYPFD
— Eric Balchunas (@EricBalchunas) December 29, 2023
In parallel, the SEC’s insistence on a closed system aligns with concerns surrounding money laundering, as Balchunas pointed out. The focus is on restricting access to actual Bitcoin to major players like BlackRock and Coinbase, fostering a more secure and regulated environment.
Adding another layer to the complexity, the ETF applicants must finalize agreements with authorized participants by the same deadline. While details are still unfolding, trading giants Jane Street and Virtu Financial are anticipated to emerge as key players in this realm, potentially becoming the authorized participants for the majority of applicants.
As the crypto community awaits the SEC’s decision, the tension is palpable, with industry experts closely monitoring the unfolding events that could significantly impact Bitcoin’s integration into mainstream financial markets.
