Bitcoin ETF Approval Imminent? SEC Adds Six Filings To Federal Register

The U.S. Securities and Exchange Commission (SEC) added six applicants for spot Bitcoin exchange-traded fund (ETF) in the Federal Register, triggerring speculation that approval for these applications could happen soon.

This is the first step in the regulator's process to decide whether to approve the proposals submitted by the six firms vying to offer spot Bitcoin ETFs. Among the six is Blackrock, the world's biggest asset manager, whose application was accepted by the regulator earlier this week.

The regulator officially acknowledged the applications from BlackRock, Bitwise, WisdomTree, VanEck, Ivvesco and Fidelity.

The publishing of the filings in the register formally starts the review process, which normally has a 45-day deadline. The deadline can be extended to as long as 240 days.

The register is the U.S. government's gazette, which contains federal agency regulations, executive orders, proposed agency rules and documents that are required by law to be published.

Earlier this month, the SEC returned several spot Bitcoin ETF proposals and commented that they are inadequate and did not meet anti-fraud and investor protection standards.

The applicants later re-filed their applications and addressed the comments from the agency by working with Coinbase, one of the world's largest crypto exchange platforms by trading volume, to be their surveillance partner to take charge in the cryptocurrency market.

It may be recalled that when the first-ever Bitcoin Futures ETF was approved in October 2021, the price of the world's first-ever crypto asset skyrocketed to an all-time high of $69,000 in the following month. The futures-based exchange-traded fund tracks the price of BTC futures contracts while ETFs directly follow the price of the crypto asset.

This latest development in the spot Bitcoin ETF applications builds up hype in the cryptocurrency community since BlackRock's filing of its application sent the value of Bitcoin to a new height and triggered a price rally.

And the SEC's comment on the filing and the report that it has returned the applications immediately sent the price of the king of crypto plummeting.

The question now is whether the SEC will approve these applications?

Slava Demchuk, CEO of AMLBot, the service that helps businesses avoid transacting with cryptocurrency wallets that have been sanctioned for cybercrime activity, said BlackRock has a high chance of being approved.

"BlackRock is the biggest investment fund in the world and the SEC has only once rejected an ETF application from BlackRock," Demchuk told International Business Times, adding that the filings reflect that there is "even greater demand for Bitcoin institutional-grade products, as the biggest traditional market participants do not want to custody crypto but still have exposure to it."

Demchuk noted that "BlackRock's ETF filling has a high chance of being approved" underlining that there is now an "even greater demand from traditional institutions than we saw in 2022-2021, citing an increase in institutional ownership of Bitcoin in the first quarter of this year.

"Year-to-date reports show that in Q1 of this year, institutional ownership of MicroStrategy shares increased 121%, and that figure includes some sudden increases in exposure by major entities, with the biggest purchases coming from Bank of America, which increased its holdings by almost $60 million, followed by Capital Group and Fidelity Investments," she told IBT, before adding that this only "shows that the biggest institutions are itching for a Bitcoin ETF, so they can eliminate third-party risks when investing in a company for an indirect Bitcoin exposure."

Jai Waterman, an experienced business and tech leader and the current the CEO of Blockstation, also thinks the applications will be approved but will "see serious challenges ahead."

Waterman noted that "Blackrock and other trusted institutions naming Coinbase as their surveillance partner can pose a risk because the ETF application can be rejected, due to the current SEC lawsuit against Coinbase."

He explained, "I believe that these applications will eventually receive approval, albeit after undergoing numerous iterations or adjustments, potentially due to changes in the circumstances surrounding the lawsuit."

Waterman said, "The fact is, the SEC's lawsuit against Coinbase has revealed its lack of confidence in the company's compliance measures. One can only imagine the uphill battle faced by the SEC staff member tasked with obtaining approval for this, as they likely encounter significant internal opposition."

The SEC filed a lawsuit against Coinbase in June, and last week lawyers of both parties met for their first hearing before District Judge Katherine Polk Failla as the court cross-examined the defendant and plaintiff over their ongoing securities violation case.

The SEC has not yet released any comments or statements regarding the spot Bitcoin ETF applications.

Bitcoin, the world's largest crypto asset by market capitalization has moved below the $30,000 threshold but is slowly climbing back.

As of 1:18 p.m. ET, BTC saw a 0.76% gain and was trading in the green zone at $29,947.52 with a 24-hour trading volume down by 15.24% at $12,427,700,670 based on the latest data from CoinMarketCap.

(Updated on July 20: This story was edited for clarity, and corrected throughout to remove grammatical errors, including in the headline; and to correct the number of applicants to six from seven in the lede paragraph. The errors are regretted.)