Towards SEC Approval: A Milestone as Multiple Spot Crypto ETF Applications Head to the Federal Register

The journey towards the approval of spot Bitcoin exchange-traded funds (ETFs) has reached a significant milestone, with multiple firms’ applications being officially published in the Federal Register. As of July 19, the Federal Register has recorded notices of proposed rule changes, signaling the submission of Bitcoin ETF applications from prominent players such as BlackRock, Fidelity, Invesco Galaxy, VanEck, and WisdomTree. By publishing these applications in the official journal of the U.S. government, the Securities and Exchange Commission (SEC) now has the opportunity to review and respond to the requests, which includes accepting or rejecting them, extending the evaluation period, or opening them for public comments.

This development comes as no surprise, following the initial filing of the applications in June. To strengthen their filings, exchanges representing these firms submitted amended applications, identifying crypto firm Coinbase as a surveillance-sharing partner. The change was made in response to previous concerns raised by the SEC, which deemed the original filings as insufficient.

The recent batch of applications adds to the growing list, which already included one from Bitwise, published on July 18, and another spot Bitcoin ETF application from Valkyrie, expected to enter the Federal Register on July 21. The SEC now has approximately 45 days, until early August, to make its initial decision on these applications. However, the commission has the authority to extend the evaluation process for up to 240 days, until March 2024, for final approval or denial.

While the SEC allowed ETFs linked to Bitcoin futures as early as 2021, it has not yet approved any spot investment vehicles with direct exposure to cryptocurrencies like Bitcoin. The introduction of the Volatility Shares Trust’s leveraged Bitcoin futures ETF in June was one of the first of its kind in the United States.

The SEC’s approach to crypto regulation has been under scrutiny from various stakeholders, including fellow regulators, lawmakers, and the public. A recent federal court ruling challenging the classification of XRP as a security has added to the pressure. Additionally, Chair Gary Gensler’s continued policy of regulation through enforcement action has garnered attention and discussion. Notably, both Binance and Coinbase have faced legal action from the SEC in 2023. As the SEC evaluates the spot crypto ETF applications, the industry watches closely for potential breakthroughs and implications for the broader cryptocurrency market.

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