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In a significant development, the U.S. Securities and Exchange Commission (SEC) engaged in discussions with BlackRock Inc. on Monday to delve into the proposed rule allowing a Spot Bitcoin Exchange-Traded Fund (ETF). The SEC’s trading and markets division also met with Grayscale Investments, a prominent crypto asset manager, to review its application.
The SEC disclosed details of the meeting, noting interactions with employees from both BlackRock and Nasdaq Stock Market. The focus of the discussion revolved around Nasdaq Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust under NASDAQ Rule 5711(d), according to a released memo.
BlackRock contributed to the dialogue by presenting two distinct models for the ETF—highlighting both in-kind and in-cash redemption structures. Although seemingly minor, these details play a crucial role in finalizing the ETF framework. While their impact on retail investors may be subtle, ironing out these specifics is deemed essential before arriving at a conclusive decision.
Presently, available Bitcoin ETFs utilize futures contracts to closely track Bitcoin’s price, with potential disparities and elevated management fees. A Spot Bitcoin ETF, once approved, is anticipated to offer a more favorable alternative, potentially attracting a broader spectrum of investors.
The SEC’s response to the presentations and meetings remains uncertain, and a final decision is not imminent. The regulatory body is expected to meticulously evaluate the intricacies of each application, with experts foreseeing a decision by early 2024. Jan. 10 is identified by JPMorgan as a crucial date for a decision on multiple applications.
According to Bloomberg Intelligence ETF analyst James Seyffart, numerous firms have engaged with the SEC in recent weeks. Notable applicants include Grayscale, Fidelity Investments, WisdomTree Inc., Ark Invest, and 21Shares. While most applications were submitted in June, several amendments have been made in the past few months.
There is speculation that the SEC may greenlight multiple ETFs simultaneously once approved, as many applications share similar frameworks with nuanced differences.
Investors are eagerly anticipating the launch of Spot Bitcoin ETFs. Historical trends suggest that Bitcoin’s price surged over $5,000 within a week of BlackRock’s June application. This enthusiasm has persisted throughout 2023, with Bitcoin recently hitting a 52-week high of nearly $40,000, as reported by CoinMarketCap.
For those considering Bitcoin purchases ahead of potential Spot Bitcoin ETF releases, Kraken is recommended for its security, user-friendly interface, low transaction fees, and 24/7 customer service. Additionally, Kraken offers staking, advanced and futures trading, non-fungible tokens (NFTs), and margin trading.
