Advanced Talks Between US SEC and Asset Managers Signal Potential Approval of Bitcoin ETFs

Key details emerged in discussions between SEC and asset managers for Bitcoin ETF approval.

Reuters reports that the US Securities and Exchange Commission (SEC) and asset managers have made significant strides in their discussions regarding the approval of Bitcoin exchange-traded funds (ETFs). The advanced nature of these talks suggests that the SEC may soon greenlight these products.

Thirteen firms, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, are awaiting the SEC’s decision on their spot ETF applications. The SEC’s resistance to these applications has historically been due to concerns about investor protection.

However, the SEC’s stance shifted after a court ruling in August against its decision to reject Grayscale’s spot ETF application. Since then, the SEC has been engaging with issuers on substantive details, typically discussed towards the end of an ETF application process.

These discussions have revolved around custody arrangements, creation and redemption mechanisms, and investor risk disclosures. The report suggests that a spot Bitcoin ETF could trigger demand of up to $3 billion in the initial days.

The SEC’s concerns about Bitcoin’s vulnerability to manipulation have been addressed by issuers through surveillance arrangements with listing exchanges and Coinbase, the largest US cryptocurrency exchange in the US.

Despite these advancements, the SEC, led by Chair Gary Gensler, a known crypto skeptic, has not publicly indicated its stance on these filings. The primary concerns remain, particularly regarding the settlement mechanism, either cash or “in-kind.”

As of now, Bitcoin is trading at $43,442.