The U.S. Securities and Exchange Commission (SEC) on September 28 filed several documents related to pending spot Bitcoin exchange-traded funds (ETFs).
These filings act as orders that initiate a proceeding through which the SEC will determine whether to approve or reject proposed rule changes. If these rule changes are approved, it could pave the way for spot Bitcoin ETFs to start trading on commodity exchanges.
The SEC is seeking comment on several matters through its latest filings. The first part largely asks commentators for their views on whether the proposed spot Bitcoin ETFs are vulnerable to or can prevent fraud and manipulation.
In another section, the SEC asks commentators whether they believe certain aspects of Bitcoin – such as its geographically dispersed trading activity, relatively slow transactions, and the amount of capital required for significant participation in each trading platform – make the market inherently resistant to the market. manipulation.
The SEC also asks commenters whether they agree that a surveillance sharing agreement with Coinbase would help detect, investigate and prevent fraud. Several current ETFs added this agreement with Coinbase through changes in mid-July.
Elsewhere, the SEC asks commentators whether the Chicago Mercantile Exchange (CME) represents a regulated market of significant size compared to spot Bitcoin. Later, commentators are asked for their thoughts on the correlation between Bitcoin spot markets and the CME Bitcoin futures market. The SEC has previously approved Bitcoin futures ETFs, suggesting that any similarity could potentially influence its decision on the new class of spot Bitcoin ETFs.
Blackrock, Valkyrie and others are affected
The SEC published orders for multiple ETFs at the same time. Two filings concern proposals from BlackRock (iShares) and Valkyrie, which are seeking a listing on the Nasdaq, while another concerns a proposal from Invesco Galaxy, which is seeking a listing on Cboe BZX.
While each order is virtually identical, the SEC has filed a much more comprehensive order regarding a spot Bitcoin ETF proposed by Bitwise, which is not based on BlackRock’s filing and which uniquely seeks a listing through NYSE Arca. That order contains a whopping 88 pages of content, while other orders are only eight pages long. Bitwise updated its file this week with 40 pages of material.
Filings do not necessarily delay the SEC’s decision
Contrary to other reports, the orders do not explicitly delay the SEC’s decision on the applications in question. The current orders may nevertheless have a delaying effect, as the sheer volume of information the SEC is seeking could prolong the proceedings.
Even if the SEC cannot delay its decision further, it may choose to reject any proposal. In this case, applicants can submit new applications and start the process again.
While the title of each order suggests that the SEC could approve any ETF, parts of the current filings are negative in tone. In particular, the regulator states that it “provides notice of the grounds for disapproval that are under consideration” and says that the current process does not indicate that it has reached a conclusion on any issues.
