Some market observers believe in the imminent SEC approval of a spot bitcoin ETF. With escalating interest in this news story, updates are arriving seemingly by the second.
Thursday afternoon, senior TechCrunch crypto reporter Jacquelyn Melinek said that approval could occur within 24 hours. “Heard from sources extremely close to the matter that the bitcoin spot ETF is going to be approved by the SEC for *multiple* firms’ applications… expecting something tomorrow.”
Here is an up-to-the-minute summary of the news on this topic.
Last year, Grayscale won several surprising victories in its lawsuit against the SEC, with a judge forcing commissioners to reconsider Grayscale’s application to convert the Grayscale Bitcoin Trust (GBTC) into a spot bitcoin ETF. For the first time in a decade, a judge said that commissioners’ denials of spot bitcoin ETFs while allowing other spot commodity ETFs were “arbitrary and capricious,” forcing them to re-explain their denials or approve the ETFs.
The conversion of GBTC into an ETF is by no means guaranteed, since the SEC still has to approve it. Similarly, at least as of Thursday evening, the SEC might choose to deny all ETF applications.
However, the news cycle has certainly reached a fevered pitch.
SEC met with exchange officials about ETF
On January 3, 2024, the SEC met with officials from the Chicago Board Options Exchange (CBOE), NASDAQ, and the New York Stock Exchange (NYSE) to discuss a potential spot bitcoin ETF.
Topics of discussion included which exchanges the ETF might trade on and recommended revisions to the 19b-4 forms filed with the SEC. This led to speculation that approval could come as soon as January 5, though others suggested that it would be delayed until January 10.
Grayscale plans to list on NYSE Arca
A recently filed Form 8-A indicates that Grayscale plans to list spot bitcoin ETF shares on the NYSE Arca exchange. Grayscale chief legal officer Craig Salm posted only a short message about the paperwork involved.
Goldman Sachs might become an authorized ETF participant
Grayscale and BlackRock have opened discussions with Goldman Sachs to become an authorized participant in their proposed spot bitcoin ETFs.
An authorized participant in an ETF helps manage the fund, including creating and redeeming shares and monitoring the ETF’s ability to track the underlying asset’s price.
Jihan Wu’s Matrixport predicts SEC would delay spot bitcoin ETFs
The SEC has been hesitant to approve a spot bitcoin ETF even though it has approved several bitcoin futures-based ETFs.
Matrixport, headed by Jihan Wu of Bitmain and Bitcoin Cash (BCH) fame, called all applications inadequate. His analysts claim they all “fall short of a critical requirement that must be met before the SEC approves.”
Matrixport predicted that the SEC will delay its decision on all outstanding applications for spot bitcoin ETFs — or reject them entirely.
Wu later apologized for that report’s conclusion and claimed that he personally believed that approval was inevitable.
TD Cowen calls spot bitcoin ETF approval a “political necessity”
Investment bank TD Cowen said the SEC’s goal of establishing itself as a digital asset regulator hinges upon approving a spot bitcoin ETF. It reasoned that the SEC should aim to dodge future lawsuits like Grayscale’s, in which an appeals court agreed with Grayscale’s allegation that denials were “arbitrary and capricious.” Congress is also considering digital asset-related legislation that could impact the SEC’s role in regulating digital assets. Better to preempt these moves and approve now, said TD Cowen.
Comments period expired January 4, 2024
The SEC held a public comment period on Grayscale’s proposed conversion of GBTC to a spot bitcoin ETF that closed yesterday. Now that the comment period has closed, bullish observers see cleared space for a speedy approval. The next tentative deadline for decisions (approvals or denials) is January 10, 2024, and might be extended further.