[NEWS] SEC moves forward with final negotiations on whether to approve a Bitcoin spot ETF

It has been learned that the SEC (Securities and Exchange Commission) has begun discussions on key technologies of an asset management company aiming to list a Bitcoin spot ETF, and that approval may be forthcoming. Reuters reported on the 7th, citing industry executives.

Thirteen companies, including Grayscale, BlackRock, and ARK Invest, are in discussions to apply for a Bitcoin spot ETF.

Proponents argue that regulated products such as ETFs that track the spot price of cryptocurrencies offer investors the best way to invest in Bitcoin. However, the SEC has refused to approve such products, saying they do not meet the standards for investor protection.

However, in August of this year, a court ruled that the SEC was wrong to reject Grayscale's application to convert its Bitcoin trust into an ETF. Since then, the SEC has continued discussions with Grayscale about approval. The details of the product's creation and redemption are being finalized by Grayscale and the SEC, according to people familiar with the matter.

A Bitcoin spot ETF could have a major impact on the cryptocurrency market. Investors who have been wary of directly holding crypto assets will be able to flow into the cryptocurrency market. Some analysts predict that if a Bitcoin spot ETF is listed, up to $3 billion (about 430 billion yen) will flow in within the first few days.

The SEC must make a final decision on Ark's application by January 10 next year. According to sources, the SEC has indicated that it may approve it as early as the new year.

In an interview with Yahoo Finance last month, ARK CEO Cathie Wood said that the nature of the SEC's discussions has changed, increasing the likelihood that some applications will be approved.

In addition, Morningstar ETF analyst Bryan Armour said, "My guess is that multiple spot ETFs will be approved at one time, which should give investors the best opportunity to compare the products."

According to memos released by the SEC, executives from BlackRock, Grayscale and Ark have been in talks with SEC team members since September, along with lawyers and executives from exchanges hoping to list physical ETFs.

Other executives also told Reuters they had spoken with SEC staff. BlackRock's meeting notes also included a detailed explanation of the asset manager's revised redemption methodology.

According to the memos and sources, the talks have mainly been with staff from the SEC's trading and markets division and the division of corporate finance, but more recently with aides to Chairman Gary Gensler.

The SEC's requests for information have also increased in pace to weekly, up from months in the past. As talks progress, issuers appear to be having to update their filings. BlackRock, for example, amended its filing this week to provide more insight into measures it has taken to protect investors.

A ruling in its Grayscale case appears to be limiting the SEC's ability to reject applications, according to sources. Many issuers believe that oversight agreements between their listing exchanges and major U.S. cryptocurrency exchange Coinbase have addressed the SEC's concerns about market manipulation.

Source: Reuters
Image: Shutterstock

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