“The Block” cited sources reporting that the U.S. Securities and Exchange Commission (SEC) has resolved the remaining issues regarding Bitcoin spot ETFs in its communication with the applicants. These issues include determining the creation/redemption process, designating authorized participants, and addressing Bitcoin fork concerns.
Grayscale agrees to adopt the cash creation/redemption model for ETFs. It is known that the focus of negotiations between the SEC and the applicants has been whether Bitcoin spot ETFs should be created and redeemed with cash or physical assets. The SEC has been firm in requiring cash creation/redemption, while the applicants have favored the physical model. Grayscale had previously insisted on using the physical model to convert its Bitcoin trust fund, GBTC, into a Bitcoin spot ETF. However, in its updated application filed on the 26th of last month, Grayscale ultimately agreed to the SEC’s request for cash creation/redemption.
Applicants begin designating authorized participants. Authorized participants (APs) are major participants in the creation/redemption mechanism of exchange-traded funds (ETFs) and are essentially liquidity providers who can even alter the supply of ETF shares in the market. According to “The Block,” in the process of amending the application documents in recent days, the applicants have started designating their authorized participants. For example, BlackRock has designated Jane Street Capital and JP Morgan Securities LLC as authorized participants, while Valkyrie has designated Jane Street Capital and Cantor Fitzgerald.
Bitcoin fork concerns. Reportedly, the applicants have reached an agreement with the SEC and have agreed to abandon any fork networks that differ from the Bitcoin main chain, such as Bitcoin Cash (BCH). Additionally, Grayscale explicitly stated in its updated proposal filed on the 26th of last month that if the ETF is approved by the SEC, it will not receive any tokens through fork networks or airdrops.
SEC meets with exchanges. Lastly, “The Block” states that the SEC has met with the New York Stock Exchange and Nasdaq this week to discuss the pending documents. While these meetings did not provide a definitive signal on whether the ETF will be approved, objectively speaking, they represent significant progress.
Related reports:
Bitcoin spot ETF still uncertain? BlackRock not notified by SEC, FOX analyzes key approval timeline
Wall Street investment banks: SEC reluctant to repeat “Grayscale defeat,” forced to approve Bitcoin spot ETF by January 10
BlackRock, Fidelity, and nine other issuers announce “authorized participants (APs)”: the final step for SEC to approve Bitcoin spot ETF