SEC's Virtual Meeting with All Bitcoin ETF Applicants Indicates Approval Anticipated by January 10, 2024

SEC’s Targeted Conference Calls with Bitcoin ETF Filers

The U.S. Securities and Exchange Commission (SEC) has been reported to hold a series of targeted conference calls with all filers of spot Bitcoin Exchange-Traded Funds (ETFs). This is considered to be a rare step from regulators in such discussions.

Focus on the “Cash Creates” Model

The primary focus of these discussions was to persuade issuers to modify their Bitcoin ETF redemption models by insisting on the “cash creates” model. This means issuers would have to convert Bitcoin to cash before trading ETF shares, consistent with the SEC’s policy prohibiting broker-dealers from directly trading Bitcoin. These calls aim to minimize the risks associated with direct Bitcoin transactions if the ETFs are approved.

Clarification of Conference Call Details

Contrary to earlier reports, these calls were separate and not joint, specifically focusing on the “Cash Creates” model. Issuers were asked to remove all hints of in-kind redemptions from their filings. There are hints that the SEC might be encouraging issuers to adopt a more stringent model, possibly the Prime Execution Agent model.

Implications for ETF Filers and the Crypto Market

The SEC’s decision on multiple ETF filings is expected by January 10, with a focus on the Prime Execution Agent model. This shift signals the SEC’s more interactive and cautious approach regarding cryptocurrencies, and issuers may have to revise their filings to align with these new guidelines.

Hot Take: New Guidelines from SEC on Bitcoin ETFs

The U.S. Securities and Exchange Commission (SEC) is urging issuers of Bitcoin Exchange-Traded Funds (ETFs) to adopt the “cash creates” model by converting Bitcoin to cash before trading ETF shares. These conversations aim to minimize risks associated with direct Bitcoin transactions. This regulatory move signals the SEC’s shift towards a more interactive and cautious approach regarding cryptocurrencies, indicating possible revisions to ETF filings and implications for the crypto market.