SEC sets strict year-end deadline for final changes to spot Bitcoin ETFs, confirms first wave of approvals to come in January

The U.S. SEC has set a strict deadline of Dec. 29 for companies hoping to launch exchange-traded funds (ETFs) tied to spot Bitcoin price, Reuters reported Dec. 23, citing people familiar with the discussions.

This significant development emerged from a high-level meeting on Dec. 21, where SEC officials engaged with representatives from leading financial entities, including BlackRock, Grayscale Investments, ARK Investments, and 21 Shares.

Representatives of the exchanges on which the new products might trade, including Nasdaq and Cboe, and lawyers for the issuers, also attended the meetings, according to meeting memos.

First wave of approvals

A key detail from the meetings was the confirmation that the SEC plans to begin approving the ETF applications in early January.

According to executives from two of the firms, the officials told the attendees that any firm missing the deadline will not be included in the initial wave of potential approvals slated for early January 2024.

The final submissions from the companies are expected to address comprehensive details, including technical specifications, fee structures, and initial funding strategies for these ETFs.

ARK and 21 Shares have been transparent about their proposed fee, setting it at 0.80% for their collaborative ETF.

The industry eagerly anticipates the upcoming decision on ARK and 21 Shares’ joint ETF proposal, which is due by Jan. 10, 2024. It’s believed that the SEC might approve multiple applications in tandem, potentially paving the way for the first-ever spot bitcoin ETFs in the U.S. market.

Change in regulatory stance

The urgency of the Dec. 29 deadline marks a crucial shift in the SEC’s approach to overseeing the nascent cryptocurrency market. Historically cautious, the watchdog has previously rejected numerous applications for spot bitcoin ETFs, citing concerns over market manipulation and investor protection.

However, recent developments, including a pivotal federal court ruling against the SEC’s rejection of Grayscale’s ETF proposal, have indicated a possible shift in regulatory perspectives.

The introduction of spot bitcoin ETFs could represent a watershed moment, offering a regulated pathway for mainstream investors to tap into the crypto market.

The cryptocurrency industry and financial markets are now keenly awaiting the SEC’s decisions in early January, which could potentially herald a new era in cryptocurrency investment and further integrate digital currencies into the global financial system.