The prospect of a spot Bitcoin ETF (exchange-traded fund) trading in the United States has been the major 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 concerning the spot Bitcoin ETF applications.
Here’s Why 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 X, Balchunas claimed that the financial regulator is instructing the Bitcoin ETF applicants to handle funds in a certain way.
Eric Balchunas wrote on X:
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 the next couple weeks.
For context, “cash create” and “in-kind” refer to the two main methods for creating and redeeming exchange-traded funds. In a “cash create” 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 replicating the ETF’s underlying asset.
Balchunas highlighted that cash creates make sense because they offer fewer limitations to broker-dealers. “Broker-dealers can’t deal in Bitcoin, so doing cash creates puts an onus on issuers to transact in Bitcoin and keeps broker-dealers from having to use unregistered subsidiaries or third party firms,” the Bloomberg analyst noted.
Going further, Eric Balchunas mentioned that although this move by the SEC was unexpected, it bodes good signs about the potential approval of a spot Bitcoin ETF. “This doesn’t change our 90% odds up or down but is a good sign the process is marching and SEC has a path fwd [forward] in the plumbing that they are comfortable with,” he added.
More Spot Bitcoin ETF Delays Trickle In
These speculations come amidst the recent delays on some spot Bitcoin ETF applications. In the latest development, the SEC has deferred making a decision on ETF filings from Global X and Franklin.
According to its official statement, the SEC expects public comments on the proposals by Global X and Franklin. James Seyffart, a research analyst at Bloomberg, highlighted that the comment period should span at least 35 days for the former and about 21 days for the latter.
Bitcoin price has been on the rise in the past few weeks as crypto investors and enthusiasts are becoming increasingly optimistic about the approval of the first spot Bitcoin ETF in the United States. The premier cryptocurrency is currently valued at $36,337, reflecting a 0.2% price decline in the past day.
Bitcoin price thickens on the daily timeframe | Source: BTCUSDT chart on TradingView