Bitcoin spot ETF applicants expect the SEC’s approvals to start by January 10

The United States Securities and Exchange Commission (SEC) has decided on December 29 as the deadline for any applicants seeking to launch spot Bitcoin ETFs. The issuers believe that the deadline is critical for those who wish to be a part of the first wave of spot Bitcoin ETF approvals, which they expect in early January 2024.

The SEC introduces new requirements for Bitcoin ETF approval

A recent report by Reuters revealed that the SEC officials met with the representatives of several companies that applied for a Bitcoin spot ETF. Those included the representatives of BlackRock, ARK Invest, 21 Shares, and Grayscale Investments. Furthermore, the meeting included representatives from the CBOE and Nasdaq, alongside lawyers and issuers involved with the mentioned applicants’ ETFs.

According to public memos and sources familiar with the matter referenced by the report, the SEC used the meetings to warn the applicants that only those who fully completed and filed their applications by the deadline would be considered during the first round of approvals.

Another report stressed that the SEC particularly focused on filings that adhere to the cash redemption model, as the regulator was seemingly not in favor of the in-kind redemptions. The reason for that is the fact that in-kind redemption would involve non-monetary payments, such as Bitcoin itself.

With the regulator insisting on the shift to a cash redemption model, many of the applicants found themselves in need of a major change to their Bitcoin spot ETF proposals. The reports also said that the SEC requested that Bitcoin ETF filers list their authorized participants as part of the filing.

The final obstacles to securing a Bitcoin spot ETF approval

Eric Balchunas, an ETF analyst at Bloomberg, highlighted the difficulty of securing an AP agreement at such short notice, especially since applicants also had to deal with the shift to cash redemptions. However, he pointed out that these may very well be the final hurdles that filers need to deal with in order to secure approval for their ETF applications.

While the SEC did present these new conditions so close to the deadline, which will likely result in most of them failing to meet the requirements in time, it is still possible that some may succeed and refile their updated applications before December 29. So far, however, this has not yet happened, as none of the applicants had an AP agreement in place.

On the other hand, as many as seven applicants managed to switch to a strictly cash redemption model. With a few more days left, the race to submit an updated filing is nearing the end.

Bloomberg analysts also assessed that the likelihood of getting a Bitcoin spot ETF approval around January 10 is currently at 90%. But, it should also be mentioned that this probability only relates to the 19b-4 applications. In order for an ETF to be actually launched, a separate Form S-1 also needs to be approved.