SEC Meets with Companies Eyeing Early 2024 Launch for Bitcoin ETFs

Prominent organizations such as BlackRock, Grayscale Investments, ARK Investments, and 21 Shares participated in these meetings with the SEC.

Officials from the U.S. Securities and Exchange Commission (SEC) convened on Thursday with representatives from seven companies eager to introduce exchange-traded funds (ETFs) linked to spot bitcoin early in 2024.

According to public memos and individuals familiar with the discussions, the SEC instructed at least two of these firms to submit their final revisions by the end of the following week.

Prominent organizations such as BlackRock, Grayscale Investments, ARK Investments, and 21 Shares participated in these meetings with the SEC.

The SEC is expected to make a decision regarding the joint proposal submitted by ARK and 21 Shares by January 10.

Most industry players anticipate that the SEC will greenlight several applications simultaneously in the days leading up to this deadline.

During the confidential meetings, the SEC set a final filing deadline of December 29, as revealed by executives from two of the participating companies.

Regulators conveyed that any issuer failing to meet this deadline would not be part of the initial batch of spot bitcoin ETF approvals slated for early January.

Representatives from exchanges where these new products could trade, such as Nasdaq and Cboe, as well as legal representatives for the issuers, were also present at these meetings, as indicated in the meeting memos.

Historically, the SEC has rejected multiple applications for spot bitcoin ETFs, citing concerns about market manipulation within the cryptocurrency space.

The agency has only approved ETFs tied to bitcoin and ethereum futures contracts trading on the Chicago Mercantile Exchange.

However, recent developments suggest a shift in the regulatory stance.

One catalyst may have been a federal appeals court decision in August, which ruled that the SEC made an error in rejecting Grayscale’s proposed trust-to-ETF conversion.

Executives who attended the meetings with SEC officials disclosed that the agency hinted at the possibility of granting approvals in the first few business days of 2024.

This would involve notifying issuers directly of the “effective” launch date for their proposed ETFs.

The SEC declined to comment on individual filings, as stated by an agency spokesperson.

In recent days, several issuers have made technical adjustments to their ETF proposals, with both BlackRock and ARK accommodating cash redemptions as requested by regulators.

Final updates will likely encompass fee details; ARK and 21 Shares are the only issuers to have disclosed a proposed fee of 0.80% for their joint ETF.

Additional information about the initial capital seeding for these ETFs will also be included, with plans to increase these seed amounts as the ETFs gain traction and liquidity in the market.