SEC Concerns Resolved: Progress Made on Spot Bitcoin ETFs

In recent weeks, companies vying for a spot Bitcoin ETF have successfully addressed key concerns raised by the Securities and Exchange Commission (SEC), according to insider sources.

In-Depth Discussions Lead to Solutions

In closed-door meetings, these firms engaged with the SEC on critical issues, such as choosing appropriate models, naming authorized participants, and devising strategies for managing hard forks and airdrops.

Model Dilemma: Cash or In-Kind Redemption?

One pivotal discussion centered around the redemption model, with some leaning towards "in-kind" and others opting for a cash model. Grayscale, a prominent player, initially pushed for in-kind but eventually acquiesced to the SEC's preference for a cash model.

Authorized Participants Revealed

A noteworthy development is the disclosure of authorized participants, a departure from the norm. Companies like BlackRock and Grayscale have named key players like Jane Street Capital and JP Morgan Securities LLC in recent filings.

Hard Forks and Airdrops Addressed

Concerns related to hard forks, alterations in the blockchain's code leading to a new version, were also discussed. Issuers have agreed that trusts will relinquish entitlements to any hard fork deviating from the main chain.

Grayscale's Adaptation and Decisions

Grayscale, a leading player, amended its S-3 form to align with the SEC's preference for a cash model. Additionally, they specified that their spot Bitcoin ETF, if approved, would not receive tokens from hard forks or airdrops.

Meetings with Exchanges and the SEC

Exchanges, including NYSE and Nasdaq, engaged with the SEC to discuss pending filings, but these meetings do not indicate a definitive decision on spot Bitcoin ETF approval.

Spot Ethereum ETF: A Different Landscape

For spot Ethereum ETFs, the outlook remains uncertain. The SEC's approval of futures-based Bitcoin ETFs influenced its approach to spot products, given past disapprovals on the grounds of price manipulation.

Complex SEC Legacy and Ether's Future

The SEC's prior disapprovals based on price manipulation created a challenging legacy, affecting their stance on spot Ethereum ETFs. The agency may reject proposals for ether-focused products for reasons beyond price manipulation concerns.

While progress has been made in resolving SEC concerns for spot Bitcoin ETFs, uncertainties persist, especially concerning spot Ethereum ETFs. The complex interplay between regulatory decisions and industry dynamics leaves the final outcome in suspense.