Discussions between the US SEC and several asset managers over the approval of spot Bitcoin exchange-traded funds (ETFs) have now delved into advanced technical details, Reuters reported on December 7, citing sources familiar with the matter.
The sources, who asked not to be named but were aware of the proceedings, told the news organization that the regulator is likely to give the ETF applications the green light soon.
Insiders cited in the reporting say discussions are now focusing on specific elements of the ETF framework that typically come late in the process. These include the details of custody arrangements, the mechanisms for creating and redeeming the funds, and extensive disclosures about the risks to investors.
The approval of a Bitcoin ETF would facilitate access to the cryptocurrency through a regulated market, which is expected to appeal to investors hesitant about the less regulated cryptocurrency space. Industry experts expect strong demand for these products, with forecasts of up to $3 billion in the first days of their launch.
13 applicants
Thirteen companies, including notable names like Grayscale Investments, BlackRock, Invesco, and ARK Invest, are eagerly awaiting the SEC’s decision on their application to launch ETFs that would track the price of Bitcoin.
These companies were in a holding pattern because the SEC has historically hesitated to approve such products, citing investor protection concerns. However, the landscape began to change after a pivotal court ruling in August, which ruled that the SEC had improperly denied Grayscale’s request to review the original filings, which the SEC had rejected over market manipulation concerns. The court ruled that the SEC’s decision was “arbitrary” and ordered that the review process continue. In October, the SEC declined to further appeal this decision, effectively resolving the dispute.
According to the sources, the ruling has apparently opened the door for a more constructive dialogue between the SEC and ETF issuers.
As the world’s largest cryptocurrency, Bitcoin’s inclusion in regulated investment vehicles such as ETFs could pave the way for wider acceptance and adoption of digital currencies in the global financial system.