3 Signs the SEC Will Approve a Spot Bitcoin ETF

The potential approval of a spot Bitcoin ETF (exchange-traded fund) by the US Securities and Exchange Commission (SEC) has been a topic of intense speculation in the cryptocurrency market. Recent developments suggest that the financial system might be on the brink of this significant milestone.

Here are three indicators pointing toward the SEC’s possible green light for a spot Bitcoin ETF:

1. BlackRock’s Revised Proposal Aligns with SEC Preferences

BlackRock recently updated its filing for a spot Bitcoin ETF , notably allowing for cash redemptions. This strategic shift appears to align closely with the SEC’s preferences, potentially increasing the chances of approval.

“The Trust issues and redeems baskets on a continuous basis. These transactions will take place in exchange for cash. Subject to the in-kind regulatory approval, these transactions may also take place in exchange for Bitcoin,” BlackRock said.

The SEC has earmarked January 15 as the decision deadline for BlackRock’s spot Bitcoin ETF application . But the final verdict is due by March 15. This move by BlackRock could set a precedent for future ETF applications, showcasing a willingness to adapt to regulatory expectations.

2. Deepened Discussions Indicate SEC’s Engagement

The dialogue between the SEC and Bitcoin ETF issuers has reportedly progressed beyond surface-level talks. The financial watchdog and institutions are delving into the key technical aspects of such offerings.

For instance, on November 20, a group from the Division of Trading and markets, including David Shillman, Tom McGowan, and Randall Roy, among others, met with several BlackRock representatives. This advancement signals a deeper involvement by the SEC in understanding and possibly accommodating the nuances of Bitcoin ETFs.

“The discussion concerned The NASDAQ Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust under NASDAQ Rule 5711(d). Blackrock also provided [a] presentation,” the SEC’s memo read.

Research Analyst at Bloomberg Intelligence James Seyffart also reported that four distinct issuers have held discussions with the SEC about their Bitcoin ETF proposals. BlackRock recently had its third meeting with the SEC, while Grayscale, Franklin, and Fidelity each conducted their own meetings.

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A federal appeals court ruling favoring Grayscale’s ETF application seems to have compelled the SEC to reconsider its stance . This could limit the SEC’s ability to reject new filings on previously held grounds. Subsequently hinting at a more open approach towards cryptocurrency-based financial products.

3. SEC Chair Acknowledges Impact of Court Rulings

SEC Chairman Gary Gensler’s recent comments reveal the agency is indeed processing multiple Bitcoin ETF filings, numbering between eight and twelve. Gensler highlighted the influence of recent court decisions on the SEC’s decision-making process.

“We had in the past denied a number of these applications, but the courts here in the District of Columbia weighed in on that. And so we’re taking a new look at this based upon those court rulings,” Gensler  said . 

This acknowledgment indicates a potential shift in the SEC’s approach, possibly making it more amenable to approving such applications. The recognition of legal precedents and the ongoing consideration of many filings suggest that the SEC is taking a more measured and potentially favorable view toward Bitcoin ETFs.

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In conclusion, the combination of BlackRock’s adaptive proposal, the deepened engagement between the SEC and ETF issuers, and the SEC Chair’s acknowledgment of the impact of legal rulings collectively point towards a higher likelihood of the SEC approving a spot Bitcoin ETF. Such an approval would be a milestone for the cryptocurrency market, signaling the increasing integration of digital assets into mainstream financial systems.