The firms who have applied for spot Bitcoin exchange-traded funds (ETFs) are given just a few days by the United States Securities and Exchange Commission (SEC) to finalize their filings before the December 29, 2023 deadline.
The SEC has passed directives in which they have stated that the last date for spot Bitcoin applications to be received by them in which the amendments in the form S-1 are to be made is December 29, 2023. Reuters has reported the news, who have cited public memos and two journalists familiar with this discussion.
According to the report, officials from the SEC met on December 21, 2023, with the representatives of at least seven firms who are hopeful of launching their spot Bitcoin ETFs in the early part of next year.
In this meeting, well-known names included firms like BlackRock, Grayscale Investments, 21Shares, and Ark Invest.
The meeting also included participation from the members of the exchanges that are being seen as the potential platforms on which these ETFs would be listed. It included Chicago Board Options Exchange and Nasdaq members, lawyers, and issuers.
The regulators had passed out a clear message to those who attended the meeting that if the issuers didn’t meet the deadline of December 29, in which they would be allowed to submit their amended form S-1 applications, then they would not be eligible for being part of the first wave of potential spot Bitcoin ETF approvals recipients, that would be made official sometime in January of next year.
According to Fox Business journalist Eleanor Terrett, one of the first sources to report the looming deadline: “The SEC told issuers that applications that are fully finished and filed by Friday will be considered in the first wave.”
On her X(formerly Twitter) profile, she also emphasized that the filings that mention in-kind creation will be rejected.
In the context of this article, in-kind creation refers to the practice of creating or issuing financial securities by exchanging them for other assets (like stocks or bonds) instead of using cash. Those applications that rely on this method will face rejection by the SEC.
The requirement, as mentioned earlier by the SEC, caused a scramble among the firms that had filed for spot Bitcoin ETFs, which forced them to make the relevant changes to their S-1 filings by replacing the in-kind redemptions with a cash replacement model in the days leading up to the meeting.
Another requirement of the SEC is that all the applicants who have submitted their spot ETF applications will need to mention the names of the authorized participants (AP).
According to ETF analyst Eric Balchunas from Bloomberg, the final hurdle for the approval of spot Bitcoin ETFs is securing an agreement with Authorized Participants (AP). Balchunas notes that obtaining this Agreement and utilizing cash for redemptions is crucial for approval.
However, as of December 22, the filers for spot Bitcoin ETFs had yet to secure the AP agreement. Seven firms had opted for a redemption model solely based on cash. Despite some firms making last-minute updates, analysts at Bloomberg remain optimistic that the SEC will approve the first spot Bitcoin ETFs by January 10.
