- November 20, 2023
- Posted by: [email protected]
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The cryptocurrency market has experienced heightened excitement and speculation following a leaked update from the U.S. Securities and Exchange Commission (SEC) regarding the potential approval of a massive $17.7 trillion Bitcoin spot exchange-traded fund (ETF). The revelation emerged from discussions between the SEC’s Trading and Markets division and various crypto exchanges, sparking significant price movements across the crypto space.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, brought this development to light on Twitter, sharing insights about the SEC’s recent interactions with exchanges regarding spot Bitcoin ETF 19b-4s. Balchunas disclosed that the SEC is advising exchanges to facilitate cash creation instead of in-kind redemptions and has urged the submission of amendments in the coming weeks.
The distinction between cash and in-kind redemptions is crucial, as it dictates the method by which funds are redeemed. In-kind redemptions involve providing investors leaving the fund with a payment other than cash. Balchunas, while noting that this development was not entirely unexpected, emphasized its positive implications for the progress of Bitcoin ETFs.
James Seyffart, another ETF analyst at Bloomberg Intelligence, echoed Balchunas’ sentiments, stating that the recent SEC engagement with exchanges does not alter their existing prediction of a 90% likelihood of a Bitcoin spot ETF approval this year. Seyffart characterized this engagement as a positive sign of continued progress in the regulatory landscape.
However, not everyone views this development positively. Gabor Gurbacs, founder of the rewards app PointsVille and an advisor to investment manager VanEck, expressed concerns about the SEC’s preference for cash Bitcoin spot ETFs. He suggested that this preference might indicate a lack of understanding or unwillingness to acknowledge the efficiency of in-kind creation, which are generally considered more effective in the ETF landscape.
Despite differing opinions on the SEC’s approach, Balchunas’ disclosure had a significant impact on the Bitcoin price. The cryptocurrency experienced a rapid surge from $36,000 to nearly $37,000 as traders eagerly reacted to the prospect of the SEC approving Bitcoin spot ETF applications from major Wall Street players overseeing a combined $17.7 trillion in assets. This development has heightened speculation and anticipation surrounding the potential approval of a Bitcoin spot ETF, particularly following BlackRock’s application in June to create such an ETF with Coinbase as its custodian.
