(Kitco News ) - Amid optimism that the launch of the first spot Bitcoin (BTC) exchange-traded fund (ETF) is imminent, the Securities and Exchange Commission (SEC) has reportedly told several companies that they need to submit all amendments to their applications by Dec. 29 if they want to be included in the potential first wave of approvals.
According to a report from Reuters, officials at the SEC met with representatives from at least seven companies with spot BTC ETF applications submitted to the regulator and told at least two of them to submit final changes by the end of this week, according to public memos and two people familiar with the discussions.
Representatives from BlackRock, Grayscale Investments, ARK Invest, and 21 Shares were all involved in last week's meetings. The SEC also met with representatives from Nasdaq and Cboe, the exchanges where the new ETF products would trade once approved.
The matter is most pressing for ARK Invest and 21 Shares as the final day that the SEC can rule on their joint application is Jan. 10. The current consensus is that the SEC will approve multiple applications at the same time, possibly in the days leading up to that deadline.
Executives from two of the firms who met with the SEC – who spoke on the condition of anonymity due to the confidential nature of the discussions – said the regulator set a deadline of Dec. 29 for final updates to their filings.
They said the SEC told attendees that any issuer who doesn’t meet that deadline will not be part of a potential first wave of spot bitcoin ETF approvals in early January.
After years of rejecting spot BTC ETF applications, analysts across the industry think the ecosystem is just weeks away from securing the first approval. There are currently 14 applications being reviewed by the SEC, and the regulator can no longer delay a decision on multiple submissions.
According to the two anonymous executives, the agency said it could approve multiple applications during the first few business days of 2024. In this case, they will inform issuers directly as to what date their request to launch their ETF would be “effective,” they said. The products would be allowed to start trading on that date.
Multiple firms have been making amendments to their applications in recent weeks, including a move by most to allow for a cash redemption model for acquiring Bitcoin for their ETFs as opposed to an in-kind model.
Fox Business journalist Eleanor Terrett was one of the first to report on the amendments deadline and subsequently confirmed that all changes to S-1s must be submitted by Dec. 29.
“The @SECGov has told issuers that applications that are fully finished and filed by Friday will be considered in the first wave,” Terrett tweeted. “Anyone who is not will not be considered. In addition, the filings cannot mention in-kind creation or they will be rejected.”
Final updates could also include information about the sums that issuers plan to use to "seed" the new ETFs, the executives said. These are likely to be relatively small amounts to start with but will increase substantially once the products officially begin trading. Seed funding provides the capital required for market makers to ensure that there is sufficient liquidity for the product to trade.
A spokesperson from the SEC said the agency does not comment on individual filings.
Along with the cash-only requirement, the SEC also wants the firms to identify the authorized participants (AP) in their filings, according to Bloomberg Intelligence senior ETF analyst Eric Balchunas.
“This is no easy last step, and may keep some from starting gate,” Balchunas said. “AP agreement + cash creates = approval.”
