CryptoETF Momentum: SEC Talks Heat Up

Conversations revolving around the prospective launch of Bitcoin exchange-traded funds (ETFs) in the United States have reportedly entered an advanced phase, according to undisclosed sources cited by Reuters on Thursday.

In a noteworthy development, the U.S. Securities and Exchange Commission (SEC) has embarked on an extensive line of questioning with potential issuers of spot Bitcoin ETFs. This meticulous inquiry is interpreted by insiders as a potential signal that the regulatory body is poised to grant approval for the pending applications.

Advancements in the Talks on Spot Bitcoin ETFs in the U.S.

Between the months of June and December in the current year, a total of 13 asset management firms have submitted applications to the SEC, expressing their intent to launch spot Bitcoin ETFs in the U.S. This list comprises financial behemoths such as BlackRock, Ark Invest, Invesco, Fidelity Digital, VanEck, and Franklin Templeton.

Adding a twist to the narrative, Grayscale re-entered the competition in August, prompted by a court mandate instructing the SEC to reevaluate the application from the asset manager. This application seeks to transform Grayscale's flagship product, Grayscale Bitcoin Trust (GBTC), into a spot Bitcoin ETF. Some insiders speculate that the court's decision in Grayscale's legal battle against the SEC could act as a catalyst for the regulator to greenlight the pending applications.

Historically, the SEC has rejected spot Bitcoin ETF applications, citing concerns about potential market manipulation. However, individuals with knowledge of the matter have revealed that the agency has commenced seeking detailed information, some of which is typically requested towards the latter stages of the ETF application process.

Increased Information Requests From the SEC

Additionally, formal discussions between the SEC and asset managers have evolved from involving personnel solely from the agency's trading, markets, and corporate finance divisions to now including employees from Chair Gary Gensler's office. The frequency of information requests from the regulator has also witnessed a noticeable uptick, transitioning from every few months to a weekly cadence.

As the dialogue surrounding spot Bitcoin ETFs continues to evolve, potential issuers have proactively adjusted their submissions to reflect new arrangements. This adaptation is particularly evident in the cases of BlackRock, Grayscale, and Ark Invest.

While the broader cryptocurrency community eagerly awaits the SEC's final decision on Ark Invest's filing, scheduled for January 10, 2024, it's important to note that there is no explicit guarantee. The SEC has refrained from making public declarations regarding the approval of the firm's product. Despite this uncertainty, sources remain cautiously optimistic that the advanced nature of discussions could pave the way for the approval of all applications in the coming month.

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