SEC Approval of US Spot Bitcoin ETFs Possible Next Week After 13 Companies Submitted Applications

Crypto investors are eagerly anticipating an upcoming decision from the U.S. Securities and Exchange Commission (SEC) that is likely to greenlight the trading of a spot bitcoin exchange-traded fund (ETF), marking a significant development more than a decade after initial rejections.

Thirteen companies have submitted applications for a spot bitcoin ETF, including Grayscale Bitcoin Trust, Ark/21Shares Bitcoin Trust, Bitwise Bitcoin ETF Trust, BlackRock Bitcoin ETF Trust, VanEck Bitcoin Trust, WisdomTree Bitcoin Trust, Valkyrie Bitcoin Fund, Invesco Galaxy Bitcoin ETF, Fidelity Wise Origin Bitcoin Trust, Global X Bitcoin Trust, Hashdex Bitcoin ETF, Franklin Templeton Digital Holdings Trust, and Pando Asset Spot Bitcoin Trust.

SEC Considering Two Crucial Components

The crypto investment landscape is currently abuzz with anticipation as investors eagerly await a pivotal decision from the U.S. Securities and Exchange Commission (SEC). The focal point of this excitement is the potential approval of a spot bitcoin exchange-traded fund (ETF), a breakthrough that could materialize more than a decade after initial attempts faced rejection.

Thirteen prominent companies have filed applications for a spot bitcoin ETF. However, the SEC's evaluation involves a complex process with two critical components: the 19b-4 filing and approval of S-1, each carrying significant implications for the future of crypto investments and regulatory oversight.

What's 19b-4 Filing and S-1 Approval?

Exchanges, including NYSE, Nasdaq, and Cboe, have submitted a 19b-4 filing, a form notifying the SEC of a proposed rule change. Given that a spot bitcoin ETF is a novel product, a rule change is mandatory under the Securities Exchange Act of 1934. The SEC must approve these rule changes before the ETF can trade. The Ark/21Shares Bitcoin Trust faces a deadline of Jan. 10 for its 19b-4 filing.

On the other hand, each company has filed an S-1, a document registering the new security with the SEC and providing specific information about the security. Since there are variations in how each company structures its product, approval of the S-1 applications is crucial. For instance, the Grayscale Bitcoin Trust requires an S-3 filing, a simplified security registration form for businesses meeting specific reporting requirements.

Anticipated approval of the 19b-4 filings is expected to pave the way for separate approvals of all S-1 applications. However, the differing nature of the applications could lead to selective approvals by the SEC.

The fee structure for these ETFs is generating widespread interest. Fidelity's Wise Origin Bitcoin Fund plans to charge 39 basis points, while Invesco's Galaxy Bitcoin ETF has set its expense ratio at 59 basis points, waived for the initial six months and the first $5 billion in assets. Ark/21Shares and Valkyrie intend to charge 80 basis points. Grayscale Bitcoin Trust, presently charging 2%, commits to lowering the fee upon approval of its transition to a bitcoin ETF. Other applicants are yet to disclose their fee structures.

Possible Bitcoin ETFs Approval Awaits

On Friday, several issuers expressed confidence in receiving final approval for their S-1 filings by late Tuesday or Wednesday. The Securities and Exchange Commission (SEC) requested what three issuers characterized as "minor" changes. Some asset managers are expected to revise their filings to disclose fees or reveal the identities of market-makers for their ETFs. These updates are required to be submitted by 8 a.m. ET (1300 GMT) on Monday and could be made public on the same day, according to sources familiar with the process.

Regulatory authorities have collaborated with exchanges to conclude 19b-4 filings, outlining the rule changes necessary for the SEC's approval of spot bitcoin ETF launches. On late Friday, exchanges submitted revisions to 11 of these filings.

Insiders familiar with the filing process suggest that issuers meeting the end-of-year filing revision deadlines might receive approval to launch by January 10. This date marks the deadline for the SEC to either approve or reject the Ark/21Shares ETF, the first-in-line fund awaiting regulatory clearance.