The U.S. Securities and Exchange Commission (SEC) is reportedly putting pressure on spot Bitcoin ETF applicants to cash out their holdings if they want to launch their products in the near future.
According to Charles Gasparino, Fox Business Network’s senior reporter, the SEC has been holding joint conference calls with spot Bitcoin ETF applicants, including some of the biggest names in the industry, such as BlackRock, Fidelity, and Franklin Templeton, to ensure that their proposed redemption models comply with the regulator’s requirements.
The SEC has been demanding that spot Bitcoin ETFs be cash-settled, meaning that investors would receive cash instead of Bitcoin when they redeem their shares. This is different from the “in-kind” redemptions that some applicants, such as BlackRock, have proposed, which would allow investors to exchange their shares for physical Bitcoin.
The SEC’s stance on cash redemptions reflects its concern about market manipulation and volatility in the cryptocurrency space. The regulator has been wary of approving spot Bitcoin ETFs since 2017 when it rejected several applications due to concerns about fraud and lack of liquidity.
However, in recent months, the SEC has shown signs of easing its stance on cryptocurrencies, as it approved several exchange-traded funds (ETFs) that track Bitcoin futures contracts or use derivatives to gain exposure to the underlying asset.
Impending SEC Decision: Spot Bitcoin ETFs’ Fate
The SEC is expected to make decisions on multiple spot Bitcoin ETF filings by January 10, 2024. The outcome of these decisions could have a significant impact on the cryptocurrency market and the demand for institutional investment in digital assets.
If approved, spot Bitcoin ETFs could attract billions of dollars from institutional investors who are looking for a convenient and regulated way to invest in Bitcoin. This could boost the price and adoption of Bitcoin as a legitimate asset class.
However, if rejected or delayed, spot Bitcoin ETFs could face legal challenges from applicants who may appeal or seek waivers from the SEC. This could prolong the uncertainty and frustration among investors who are eager to access the benefits of investing in Bitcoin.
Therefore, it seems that both sides are trying to reach a compromise that would satisfy both parties’ interests and expectations. However, given the complexity and sensitivity of this issue, it remains unclear whether a consensus can be reached before January 10th.
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