Cryptocurrency Investors Eagerly Awaiting SEC Decision on Bitcoin ETF

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By journalsofus.com


  • Grayscale Bitcoin Trust
  • Ark/21Shares Bitcoin Trust
  • Bitwise Bitcoin ETF Trust
  • BlackRock Bitcoin ETF Trust
  • VanEck Bitcoin Trust
  • WisdomTree Bitcoin Trust
  • Valkyrie Bitcoin Fund
  • Invesco Galaxy Bitcoin ETF
  • Fidelity Wise Origin Bitcoin Trust
  • Global X Bitcoin Trust
  • hashdex bitcoin etf
  • Franklin Templeton Digital Holdings Trust
  • Pando Asset Spot Bitcoin Trust

How will the SEC proceed?

Applications consist of two components:

1)A 19b-4 filing, which is a form used by exchanges to notify the SEC about proposed rule changes. In this case, a rule change is required under the Securities Exchange Act of 1934 because the Spot Bitcoin ETF is a new product, and the exchanges – NYSE, Nasdaq and Cboe – must provide rules explaining how the product will trade. . The SEC must approve the rule change before the product can be traded. It is this filing that faces the January 10 deadline for the Ark/21Shares Bitcoin Trust.

2) S-1 approved, This is a document used to register a new security with the SEC, providing information about the specific security. In this case, each company applying for a spot Bitcoin ETF has a difference in the way their product is structured. In the case of Grayscale Bitcoin Trust, an S-3 filing must be approved, which is a simplified security registration form for businesses that meet other reporting requirements.

It is widely anticipated that once the 19b-4 filing is approved, the SEC will separately approve the S-1 applications of all ETF applicants at once. However, because the applications differ, it is not a slam dunk. The SEC may decide to approve some, but not all, of the S-1.

Wide spread in fees

With 13 companies applying for a Bitcoin ETF, all of which have similar products, there is considerable interest in what the fee structure will look like.

Fidelity’s Wise Origin Bitcoin Fund has announced it will charge 39 basis points, or 0.39%. Invesco’s Galaxy Bitcoin ETF has set its expense ratio at 59 basis points, which is waived for the first six months and the first $5 billion in assets. Arc/21Shares and Valkyrie will charge 80 basis points.

Grayscale Bitcoin Trust currently charges a 2% fee, but has said it is committed to reducing the fee once its application to convert to a Bitcoin ETF is approved.

Other applicants have not announced their fee structure yet.

It is not clear who is the main regulator of the crypto industry

All this is happening against the backdrop of SEC Chairman Gary Gensler’s long-running battle with the crypto industry.

Gensler has fought several court battles against major crypto players, including a losing battle against the Grayscale Bitcoin Trust, which won the case against the SEC last summer. In that case, the U.S. Court of Appeals for the D.C. Circuit ruled that the SEC had already approved a futures-based Bitcoin product and failed to explain why it had refused to approve a spot-Bitcoin product. . In essence, the court said, the futures and spot markets are “identical” products. If the SEC approved one, it would logically have to approve the other.

Bitcoin is considered a commodity, but with the exception of Ether, there is no such regulation on other cryptocurrencies. In the absence of explicit federal regulations, the SEC has resorted to regulation by enforcement to demonstrate that many cryptocurrencies are securities, and therefore it has regulatory authority over most of the crypto industry.

There is a classic case against Coinbase, the largest US crypto exchange, where the SEC alleges that the company violated rules requiring it to register as an exchange. In that case, the SEC alleged that certain crypto assets traded on Coinbase were securities and fell within the SEC’s purview.

According to Gensler, the SEC sued Binance and its founder Changpeng Zhao last June, alleging that Binance and Zhao “engaged in a wide web of fraud, conflicts of interest, lack of disclosure and calculated evasion of the law.” “

The case is ongoing, but in November, the U.S. Justice Department filed separate charges against Binance and Zhao, with Zhao pleading guilty to money laundering violations and agreeing to pay a $50 million fine and step down as chief executive of the company. Agreed to step down from his role. Binance also acknowledged the appointment of a government monitor to oversee the business.

Cathie Wood of ARK Invest will be our guest on “Halftime Report” Monday at 12:35 p.m. and “ETF Edge” on Monday at 1:10 p.m. to 1:30 p.m. on ETFs.cnbc.com.

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