Big Money Management Firms Expect SEC to Greenlight Spot Bitcoin ETFs by January 10

Disclosure: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. By using this website, you agree to our terms and conditions. We may utilise affiliate links within our content, and receive commission.Source: AdobeStock / Backcountry MediaBig money management firms expect the Securities and Exchange Commission (SEC) to grant approval for the first “spot” Bitcoin (BTC) exchange-traded fund (ETF) in early January

According to sources close to these firms, recent guidance from SEC officials suggest a green light will likely come by January 10, Fox Business reported Thursday

The SEC’s final deadline to approve or deny the application for a spot Bitcoin ETF is January 10, 2024, submitted by Ark Investment Management in collaboration with 21Shares.

Approximately a dozen companies, including renowned Wall Street asset managers like BlackRock and Fidelity, have applied for a spot Bitcoin ETF.

utives at these firms believe that the SEC might approve multiple applications simultaneously

The approval of a spot Bitcoin ETF would provide retail investors with increased exposure to the largest cryptocurrency at a lower cost compared to Bitcoin ETFs already approved and based on futures markets

Furthermore, investors can gain access to Bitcoin through regulated money management firms, bypassing unregulated exchanges, as these ETFs would be traded on the New York Stock Exchange and Nasdaq.

SEC Insists on Cash Redemptions

In meetings with major money management firms, the SEC has insisted that applicants use cash to purchase shares of the ETF rather than the underlying asset, Bitcoin

This marks a departure from the conventional “in-kind” transactions, where market makers can exchange Bitcoin for ETF shares.

Cash redemption creates a more complex process, as ETF issuers will have to exchange Bitcoin for cash in each transaction, thus buying the Bitcoin themselves instead of relying on broker-dealers.

Another drawback of cash creation is that investors would lose an important tax advantage

In-kind purchases are not subject to taxation, but selling Bitcoin for cash before purchasing the ETF would incur taxable events.

Notably, some spot Bitcoin ETF applicants, such as Grayscale, are reluctant to abandon the pursuit of in-kind creations

In a recent meeting with the SEC, Grayscale argued that offering both in-kind and cash creations and redemptions would be in the best interest of investors, fostering a more efficient market structure.

BlackRock Has Made Spot Bitcoin ETF a Priority

BlackRock, the world’s largest money manager with over $9 trillion in assets under management, has made obtaining SEC approval for its proposed Bitcoin ETF a top priority

As reported, CEO Larry Fink has referred to Bitcoin as an international asset and a store of value comparable to gold

He said that he believes this move would democratize the cryptocurrency market and make it more accessible for retail investors.

“What we’re trying to do with crypto is make it more democratized with all of crypto and making it much cheaper for investors,” Fink said during an interview on The Claman Countdown

BlackRock has engaged in five meetings with the SEC regarding its spot Bitcoin ETF application, with the most recent occurring on Tuesday

The SEC has held approximately 24 meetings with ious ETF applicants, signaling its commitment to bringing these products to market in the new year.

While the possibility remains that the SEC may deny all applications, industry officials consider it unlikely

Specifically, the US Court of Appeals for the District of Columbia Circuit has ruled in favor of Grayscale, ordering the SEC to set aside its earlier rejection of Grayscale’s application and reopen the review process.