Current Status of Discussions Between Companies Applying for Spot Bitcoin ETFs and the SEC

• It has been reported that the U.S. Securities and Exchange Commission (SEC) held a joint teleconference with spot Bitcoin ETF applicants.
• Terrett stated that the purpose of the meeting was for the SEC to focus on ensuring issuers convert all ‘non-value matter returns’ in ETF applications into cash.
• Terrett said, ‘This means issuers must convert their Bitcoins into cash before buying ETF shares.’

What is the current status of the discussions between the U.S. Securities and Exchange Commission and the companies applying for ETFs?

Firms in Talks with SEC on Spot Bitcoin ETFs

It has been reported that the U.S. Securities and Exchange Commission (SEC) held a joint teleconference with spot Bitcoin ETF applicants. Charles Gasparino, senior correspondent at Fox Business, shared an update on the development.

Gasparino referred to this as a “rarely seen joint teleconference” and noted that this development is ongoing. Previously, he emphasized that a decision on the spot ETF could come by January 10th, and this decision would determine retail investors’ access to cryptocurrencies.

Fox’s reporter Eleanor Terrett also shared a significant update based on sources. According to her, the purpose of the call was to “get everyone to create cash.” Terrett explained that the meeting focused on the SEC ensuring that issuers convert all “non-value matter returns” in ETF applications into cash.

Terrett stated, “This means issuers must convert their Bitcoins into cash before buying ETF shares.” According to the report, in simple terms, issuers have been instructed by the SEC not to use Bitcoin directly for buying or redeeming shares. This aligns with the existing SEC policy that does not allow broker-dealers to engage in Bitcoin trading.

This development could be considered a significant step for the cryptocurrency market where the SEC’s past careful rejection has turned into a dialogue. With the decision to mandate cash conversions, it is believed that the SEC aims to reduce risks ahead of a potential approval.

Numerous calls were made to exchanges

Despite the approaching deadline for several ETF applications, the joint conference was considered a significant step. However, according to a report by Bloomberg senior analyst Eric Balchunas, there were separate discussions between the SEC and the applicants. Additionally, it was reported that the SEC might be asking issuers to adopt a more stringent model.

Balchunas also mentioned that the approval window is between January 8th and 10th, with a comment period for late applicants. There is a specific focus on the SEC’s approach to the Prime Execution Agent model. According to James Seyffart of Bloomberg, this model involves a third party buying and selling Bitcoin on behalf of the ETF.

Based on the new guidance, applicants such as BlackRock are likely racing to update their documents. Seyffart noted that Bitwise Invest was the first company to transition to the Non-Value Matter model in this latest wave.