In a significant twist to the spot Bitcoin ETF saga, the US Securities and Exchange Commission (SEC) is seemingly intensifying its communication with applicants, a development that stands out in the long history of the Bitcoin ETF application process. This move comes on the heels of fake news regarding BlackRock’s Bitcoin ETF approval, adding to the momentum surrounding potential SEC acceptance.
Historically tight-lipped on Spot Bitcoin ETFs, the SEC’s proactive outreach has been acknowledged by some major players in the investment world. Ark Invest, in collaboration with 21 Shares, became the pioneering applicant to revise its submission in direct response to the SEC’s feedback in recent days, as Bitcoinist reported.
Following their lead, other key players, including Fidelity, have made similar adjustments. Eric Balchunas, Bloomberg’s noted ETF analyst, remarked via X, “Now Fidelity has filed an amended application. Three issuers down, six-ish to go.”
Spot Bitcoin ETF Momentum Picks Up
Diving deeper into the substance, Fidelity’s renewed application elucidates several pivotal components of its spot Bitcoin ETF. Among them are the intricacies of custody arrangements, the procedures around hard forks, how they determine valuation and pricing while adhering to the Generally Accepted Accounting Principles (GAAP), comprehensive risk disclosures related to regulatory uncertainties, the energy consumption implications of Bitcoin mining, and potential risks linked to illicit transactions.
Scott Johnsson of Davis Polk weighed in on the trends he observed from the amendments: “The amendments thus far have been detailed in specifying custodial arrangements, explaining the mechanics around hard forks, clarifying the sources of valuation and pricing and their adherence to GAAP, and discussing the risk factors associated with regulatory uncertainties, energy-intensive nature of mining, and illicit transaction implications.”
He further speculated on the trajectory of these developments and predicted that it will be “most interesting” to see the next round of amendments, as it should be “more apparent what is actually being focused on by the SEC versus merely issuers enhancing their disclosures given that approval seems more plausible now.”
James Seyffart, another Bloomberg expert, responded to Johnson’s insights with his observation: “These amended applications are further evidence that potential spot Bitcoin ETF issuers are actively communicating with the SEC about the changes and amendments needed for potential SEC approval. It’s a positive sign, in my opinion. However, we can expect more amendments in the coming weeks and months. This appears to be a dynamic dialogue with feedback loops and responses. I’m keenly awaiting the SEC’s subsequent requests in these documents.”
Shedding further light on the matter, in a podcast session with Scott Melker, both Seyffart and Eric Balchunas dived deeper into the implications of these developments. Balchunas articulated, “There will be multiple at once. […] If it is January 10th, I bet we will hear about the approval in 2023.”
The momentum suggests that everything is aligning for a January launch. If the SEC doesn’t greenlight Ark’s ETF by this date, they’ll need to provide an entirely new rationale. But given their recent engagements with issuers, this doesn’t seem plausible.
“And so we think they’ll do the same thing as with Ether [Futures ETFs], accelerate the rest of them, move them up to Ark’s state and then let them go out in two rounds or on the same day whoever is ready or not,” Balchunas explained.
Given these developments, the Bitcoin and investment community is on the edge of their seats as they eagerly await the SEC’s next move on the spot Bitcoin ETF front. The recent proactive stance by the regulatory body has certainly given new glimmers of hope to those anticipating a favorable verdict.
At press time, BTC traded at $28,683, after facing resistance at the $29,000 mark during the Asian trading hours.
Featured image from Medium, chart from TradingView.com