The cryptocurrency community is on high alert as the US Securities and Exchange Commission (SEC) nears a significant deadline for the potential approval of a spot Bitcoin Exchange-Traded Fund (ETF).
The outcome, slated for January 10, 2024, holds the potential to signify a major integration of Bitcoin into traditional financial markets. However, concerns linger among some, apprehensive that the approval might also signal a path toward heightened centralization in the cryptocurrency space.
December 29 deadline
The SEC has purportedly established a deadline of December 29, 2023, by which companies aiming to introduce Spot Bitcoin ETFs must conclude their application procedures.
Prominent entities such as BlackRock, Grayscale Investments, ARK Investments, and 21 Shares have been prominently engaged in dialogues with the SEC, indicative of the industry’s widespread anticipation.
Fox Business reporter Eleanor Terrett confirmed the December 29 deadline in a post on December 24, specifying that only those ETF applications that are “fully finished and filed” by that date will be taken into consideration for approval.
Will multiple ETFs be approved at once?
There is widespread anticipation and speculation regarding the possibility of the SEC approving multiple spot Bitcoin ETF applications simultaneously before the January deadline.
This expectation, echoed by analysts such as Eric Balchunas from Bloomberg Intelligence, suggests that the SEC is poised to greenlight several applications concurrently. Balchunas, as recently as Wednesday this week, stated that the SEC is “ready to approve spot bitcoin ETFs,” noting a frenzied effort among ETF issuers behind the scenes to conclude their applications.
He emphasized that only those ETF applicants who have fully completed their submissions by the December 29 deadline will be considered for “the crucial first tranche of the race.”
Cash redemption model
The participation of major Wall Street entities and the potential availability of Bitcoin ETFs to financial advisors and money managers have generated considerable excitement surrounding the anticipated ETF approvals.
Despite this positive outlook, challenges persist. The SEC’s preference for cash redemption models over in-kind redemptions presents obstacles for some ETF applicants. Additionally, a final requirement involves naming authorized participants (AP), and the absence of an AP agreement has been observed for spot Bitcoin ETF applicants by December 22.
Nevertheless, market sentiment remains notably optimistic, evident in significant gains for Bitcoin in anticipation of potential ETF approval. If approved, SEC endorsement could signify improved accessibility to Bitcoin for investors, eliminating the complexities associated with managing wallets and private keys. This streamlined access has the potential to attract increased institutional and retail investment to the digital asset market.
