SEC in Talks with Exchanges for Spot Bitcoin ETFs: What Could This Indicate?

• Eric Balchunas claims to have heard rumors that the US Securities and Exchange Commission (SEC) is in talks with exchanges over spot Bitcoin ETFs.
• In an earlier report, Seyffart put the probability of SEC approval of a spot Bitcoin ETF at 90%, a projection supported by conversation with relevant brokerage firms on cash generation.
• WisdomTree, a prominent ETF provider, is one of the latest applicants to submit a revised version of its application.

The Trading & Markets division of the US Securities and Exchange Commission is negotiating with exchanges for spot Bitcoin ETFs: Here are the details!

SEC In Talks With Exchanges For Bitcoin ETFs

Bloomberg’s senior ETF analyst, Eric Balchunas, claims to have heard rumors that the U.S. Securities and Exchange Commission (SEC) is in discussions with exchanges regarding spot Bitcoin ETFs. In a previous tweet, Balchunas stated that the SEC’s Trading and Markets division informed these exchanges about the changes they want to see. Balchunas said:

“I’m hearing rumors that the SEC’s Trading & Markets division interacted with exchanges this week on spot bitcoin ETFs, telling them they’d prefer ETFs to choose to create cash (versus in-kind) and would like them to make changes within a few weeks.”

Balchunas mentioned that this move was expected, and the idea was welcomed because it could reduce restrictions on broker-dealers imposed by “cash creation.” In his words, cash creation allows broker-dealers to avoid using unaffiliated sponsors or third-party firms to deal with the underlying Bitcoin assets held by Exchange Traded Funds (ETFs).

The news is not new for spot Bitcoin ETF applicants, as they had already anticipated the possibility of such discussions with the SEC. Other applicants are planning to go the opposite route instead. This second group will have to adapt to the new demand or face the risk of a delay. Balchunas noted that the new development did not affect the already predicted chances of approval for spot Bitcoin ETFs.

Chances of Approval Increasing for Spot Bitcoin ETFs

Balchunas and his colleague James Seyffart had previously raised the likelihood of SEC approval for spot Bitcoin ETFs to 90%, supported by discussions on cash creation with relevant brokerage firms. Based on this projection, the entire crypto industry expects approval by January 10. Some unexpected situations may cause delays, but the general consensus is that the market will eventually have a spot Bitcoin ETF.

Most applicants have made specific changes to their applications in line with the SEC’s guidance and have submitted new application files. Many of these revised applications have addressed the SEC’s feedback and inquiries. WisdomTree, a prominent ETF provider, is one of the latest applicants to submit a revised version of their application.

Meanwhile, the news of the SEC’s discussions with exchanges has caused an increase in the price of Bitcoin. At the time of writing, the leading cryptocurrency was trading at $36,700, showing a 0.86% increase as altcoins attempted to find balance.