Bitcoin ETF: SEC Reportedly in Talks With Exchanges

Senior Bloomberg ETF analyst Eric Balchunas claims to be hearing chatter that the United States Securities and Exchange Commission (SEC) is in talks with exchanges over spot Bitcoin ETF. 

SEC Advises Exchanges on Cash Creates

According to an earlier tweet, Balchunas stated that the SEC’s Trading and Markets division is advising most of these exchanges on the amendments to make. 

“Hearing chatter SEC’s Trading & Markets engaged with exchanges this week on spot bitcoin ETF 19b-4s, is advising them they’d like the ETFs to do cash creates (vs in-kind), and has asked them to get in amendments in next couple weeks,” Balchunas wrote on the X app.

He noted that the move is not unexpected as it is also a good sign. In Balchunas’ opinion, the idea of “cash creates” is welcomed considering that it would mitigate the restrictions placed on broker-dealers. 

In his words, Cash creates “keeps broker dealers from having to use unregistered subsidiaries or third party firms to deal” with the underlying Bitcoin assets the Exchange Traded Funds will hold.

The news is also not novel to some of the spot Bitcoin ETF applicants as they had already planned on the likelihood of this conversation from the SEC. Other applicants intend to go in-kind instead. This latter group will be required to adjust to the new request or risk a delay. He concluded by pointing to the fact that the new development does not impact the already predicted odds for the spot Bitcoin ETF approval. 

Odds of Spot Bitcoin ETF Approval Rising

Both Balchunas and his colleague James Seyffart raised the odds of approval of a spot Bitcoin ETF by the US SEC to 90% in an earlier report, a projection that is bolstered by the conversation on cash creates with relevant brokerage firms. 

Riding on this projection, the entire crypto industry is expecting approval by January 10. 

Many of the applicants have made certain amendments to their applications and resubmitted a new filing based on the SEC’s promptings. Most of these amended applications addressed feedback and queries from the SEC. Prominent ETF provider WisdomTree is one of the latest applicants to submit a revised version of its filing. 

Meanwhile, the news about the SEC’s discussion with exchanges has caused the price of Bitcoin to surge. At the time of this writing, the flagship cryptocurrency is trading at $36,472.99, up by 1.48% as altcoins struggle to find their balance.