Financial Ballet: The Enigmatic Odyssey of the Spot Bitcoin ETF

Amidst the intricate dance of regulatory processes, the United States Securities and Exchange Commission has unveiled the first act of its drama—a potential approval window for a spot Bitcoin ETF. Analysts, donning their speculative hats, muse that even if the SEC grants its blessing to a spot Bitcoin ETF, the eagerly awaited debut on the market is poised to linger in the wings for a month.

Why the prolonged intermission, you ask? Well, the launch of an ETF unfolds as a two-step ballet. For an issuer to usher in a Bitcoin ETF, they must first secure the elusive nod from the SEC's Trading and Markets division for the 19b-4 filing and, simultaneously, from the Corporate Finance division for the S-1 filing or prospectus.

Now, enter the Corporate Finance division—a realm where the minutiae of fund operations and the unveiling of risk disclosures take center stage. Out of the dozen Bitcoin ETF applications, nine issuers have gracefully presented revised prospectuses, showcasing their courtship with Corporate Finance. Analysts, akin to fortune tellers deciphering celestial alignments, predict that the Bitcoin ETF's grand entrance might face a delay if the SEC nods to the 19b-4 approvals before the final flourish of the prospectus documents.

What Scott said: There are TWO paths that need to be completed for an ETF launch. Even if 19b-4 is approved, S-1s still need sign off from division of Corp Fin. No sign that's done yet. Possible and even likely that there could be weeks or even months between approval & launch https://t.co/LZSdutmlT8 pic.twitter.com/7OLj5HjSDy

— James Seyffart (@JSeyff) November 8, 2023

In this intricate choreography, Bloomberg's ETF analyst, James Seyffart, waltzes onto the scene with a reminder— even if the 19b-4 wins the judges' favor, the S-1 approval waltz could twirl on for weeks or, perhaps, months before the grand ball of the launch.

New Research note from me today. We still believe 90% chance by Jan 10 for spot #Bitcoin ETF approvals. But if it comes earlier we are entering a window where a wave of approval orders for all the current applicants *COULD* occur pic.twitter.com/u6dBva1ytD

— James Seyffart (@JSeyff) November 8, 2023

As the SEC orchestrates this financial ballet, there exists an eight-day window, commencing on Nov. 8 and curtaining down on Nov. 17, where the regulatory maestros could give the green light to the first spot Bitcoin ETF. Despite the market's seers enhancing the odds of approval to a resounding 90%, the crescendo of approval tunes isn't expected until the early notes of the upcoming year.

In a subplot, the SEC graciously extended the deadline for comment on the spot Bitcoin ETF until Nov. 8, allowing the audience to have their say.

The ballet for the spot Bitcoin ETF in the U.S. commenced when BlackRock, a financial virtuoso of global stature, gracefully submitted its application. Yet, in this balletic drama, Fidelity and a few other asset managers also took to the stage, only to face rejection or gracefully exit the performance.

Now, as the financial narrative unfolds through the rhythmic beats of the 2023-2024 cycle, market commentators, much like clairvoyants gazing into crystal balls, anticipate a potential approval for the spot ETF, awarding it a staggering 90% likelihood. The stage is set, the performers poised, and the audience eagerly awaits the grand finale of this financial ballet.

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