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SEC Decision This Week Could Open New Chapter for Cryptocurrency

Key Takeaways
  • Big names like BlackRock and Fidelity await SEC approval for Bitcoin ETFs by January 10, potentially streamlining Bitcoin investment via the stock market.
  • SEC's nod on exchange filings and registrations is key for spot Bitcoin ETFs. Trading may start as early as January 11 if approvals are granted.
  • Analysts anticipate SEC approval, highlighting the efforts of Chair Gary Gensler. Nate Geraci and Eric Balchunas stress undisclosed fees and investor preferences in spot Bitcoin ETFs.
09-Jan-2024 By: Sudeep Saxena
SEC Decision This We

SEC Greenlights Exchange Filings for Spot Bitcoin ETFs Before Launch

This week, the U.S. Securities and Exchange Commission (SEC) is going to decide whether they'll approve Bitcoin exchange-traded funds (ETFs). These ETFs would make it easier for people to invest in Bitcoin through the stock market.

Big financial companies like BlackRock and Fidelity want to offer these Bitcoin ETFs, but the SEC needs to give the green light first. The decision is expected by January 10, and these companies have until Monday to make any last changes to their proposals.

Role of Delegated Authority in the SEC's Bitcoin ETF Approval

When starting trading for a spot Bitcoin ETF, the SEC needs to give the thumbs-up on specific filings from the exchanges wanting to list these ETFs. Then, they've got to approve registration applications before the launch can happen.

Once the SEC gives the green light for both the 19b-4 filings and the S-1 registrations, the Bitcoin ETFs can hit the exchanges and start trading pronto—maybe even as soon as January 11, the next business day after approval.

According to Eric Balchunas, an ETF analyst at Bloomberg Intelligence, the SEC hasn't directly voted on Bitcoin ETFs before. Usually, these decisions were made through "Delegated Authority." Balchunas thinks this might happen again, given that this push for Bitcoin ETFs has been driven by higher-ups within the SEC, especially after the success with Grayscale.

Balchunas also reckons that even if there were a vote, SEC Chair Gary Gensler probably wouldn't say no. Firstly, there's no solid reason to deny it, and secondly, Gensler's been leading the charge, putting in loads of time and effort along with the staff and issuers to make this happen.

Monitoring Unrevealed Fees and Ownership Dynamics

Nate Geraci, President of The ETF Store, outlined his focus for the week, highlighting the imminent disclosure of undisclosed fees in spot Bitcoin ETFs. This emphasis coincides with observations made by Balchunas, emphasizing the ownership structure and investor preferences within these ETFs.

Balchunas reiterated that investors in spot Bitcoin ETFs do possess the Bitcoin held by the custodian. While the sale of these ETF shares doesn't facilitate the direct retrieval of Bitcoin, he pointed out that most ETF users prefer transactions in USD rather than Bitcoin.

He further emphasized that those steadfastly committed to owning Bitcoin directly should consider doing so instead of opting for the ETF route.

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