The prospect of a spot bitcoin ETF (exchange-traded fund) trading in the United States has been the main topic of discussion in the cryptocurrency space over the past few weeks. In the latest development, a Bloomberg analyst reported that the US Securities and Exchange Commission has been engaging with exchanges regarding bitcoin ETF spot applications.
Here’s why the SEC interacted with exchanges this week
On Friday, November 17, Bloomberg analyst Eric Balchunas provided an update on the potential approval of spot bitcoin exchange-traded funds by the SEC. In a post on XBalchunas stated that the financial regulator is instructing bitcoin ETF applicants to handle the funds in a certain way.
Eric Balchunas wrote in X:
Listening to the SEC’s Trading & Markets talk to exchanges this week about 19b-4 bitcoin spot ETFs, he warns them that they would like the ETFs to generate cash (rather than in kind), and has asked them to table amendments in the next couple of weeks.
For context, “cash creation” and “in-kind” refer to the two primary methods of creating and redeeming exchange-traded funds. In a “cash creation” situation, authorized participants exchange cash equivalent to the shares they want, while “in-kind” allows authorized participants to provide an ETF with a basket of securities or assets that replicate the ETF’s underlying asset. .
Balchunas noted that cash creations make sense because they offer fewer constraints on stockbrokers. “Stockbrokers cannot trade bitcoin, so cashing in creates a liability for issuers to transact in bitcoin and prevents brokerages from having to use unregistered subsidiaries or third-party companies,” the analyst at Bloomberg.
Going further, Eric Balchunas mentioned that although this move by the SEC was unexpected, it bodes well about the possible approval of a bitcoin spot ETF. “This doesn’t change our 90% odds up or down, but it is a good sign that the process is moving forward and the SEC has a path forward in the pipeline that they are comfortable with,” he added.
More Delays Appear for Spot bitcoin ETFs
These speculations come amid recent delays in some one-time bitcoin ETF applications. In the latest development, the SEC has delayed making a decision on Global X and Franklin’s ETF filings.
According to its official statement, the SEC is awaiting public comments on the Global X and Franklin proposals. James Seyffart, a Bloomberg research analyst, noted that the comment period should span at least 35 days for the former and about 21 days for the latter.
The price of bitcoin has risen in recent weeks as investors and cryptocurrency enthusiasts become increasingly optimistic about the approval of the first spot bitcoin ETF in the United States. The leading cryptocurrency is currently valued at $36,337, reflecting a 0.2% price drop over the past day.
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bitcoin price thickens on the daily timeframe | Source: BTCUSDT chart on TradingView
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