Original - Odaily
Author - Qin Xiaofeng
On Monday night, the fake news that SEC approved a Bitcoin spot ETF caused the encryption market to experience an illusory and short-lived bull market. Upon closer inspection, the key factor in the success of this scam is the use of information bias to manipulate the market at the critical time point of ETF resolution.
In fact, according to the original timetable, October 16th and 17th were the deadlines for the SEC to make decisions on Bitcoin spot ETFs owned by six companies, including BlackRock, Bitwise and Invesco. However, on September 27 and 29, the SEC issued documents to postpone the above-mentioned ETF resolution. However, due to the lag in the dissemination of market news, investors in the crypto market do not have a comprehensive understanding of ETF-related trends, and this is why they are misled.
Back to the original question, how far are we from the advent of a Bitcoin spot ETF? The answer to this question needs to be from two dimensions: one is the time process, and the other is the regulatory attitude.
(1) The ETF approval process is lengthy, and ARK 21 Shares has become a benchmark
Judging from the ETF process, the maximum time is 240 days, and the SEC must make a final decision, whether to approve or reject. We take the ARK 21 Shares Bitcoin ETF, which is currently the fastest growing, as an example to review its application process to help readers understand. Throughout the application, multiple time points occurred, as follows:
On April 25, 2023, Cboe BZX Exchange filed with the U.S. SEC for listing and trading ARK 21 Shares Bitcoin ETF stocks (this is the initial filing time and the beginning of a new round of project approval), and submitted corresponding rule changes .
On May 15, 2023, the ARK 21 Shares Bitcoin ETF after the rule change was officially published in the U.S. Federal Register and solicited comments. This marked the official launch of the ETF approval process. The SEC must take up to 240 days from that date ( 180+ 60) make a decision.
The first review period is 45 days, that is, the SEC must make an indication before June 29, 2023: agree, deny, or extend; finally, the SEC issued an indication on June 15 that an extension is needed. The ARK 21 Shares Bitcoin ETF has since submitted three amendments to proposed rule changes in response to SEC challenges.
The second review period is 45 days, that is, the SEC must issue an approval before August 13, 2023; ultimately, the SEC decided to continue the extension on August 11.
The third review period is 90 days, that is, the SEC must make an indication before November 11, 2023. On September 27, the SEC issued an announcement to extend another 60 days (based on November 11), and the deadline for the ETF to make a resolution was postponed to January 10, 2024. The Commission considers it appropriate to specify a longer period for making its decision to allow sufficient time to consider the proposed rule changes.
The Bitcoin spot ETFs of several other large asset management companies were basically announced on July 18 or 19, far later than ARK 21 Shares’ products, and were also announced by the SEC on September 27 and 29. The decision was postponed (original decision time was October 16th to 17th). Odaily has statistics on the decision-making time points of each ETF, as follows:
As can be seen from the above figure, the current time node closest to Global X Bitcoin Trust is November 21, 2023, but it is estimated that it will most likely be delayed. After all, its application was the latest and has only entered the second round of review. Others have entered the third round and are unlikely to receive priority approval. The more important time point is around mid-January next year, when there will be 8 ETFs waiting for resolution.
It is important to note that the approval result of the ARK 21 Shares Bitcoin ETF will become a weather vane.
January 10, 2024 is the final time node for the approval of ARK 21 Shares Bitcoin ETF. If rejected, ARK 21 Shares will have to go through the process again and start a long 240-day review period, just like what they experienced in 2022; the deeper impact is that other companies will not be immune and can basically announce in advance This round of spot ETF applications is basically dead - although the final decision time for the following ETFs will be mid-March next year.
Of course, if ARK 21 Shares is successfully approved, there is a high probability that several others will also be approved at the same time, and the SEC will not allow any one institution to gain an important first-mover advantage. Therefore, investors need to pay close attention to the movements of ARK 21 Shares from the end of 2023 to the beginning of 2024.
(2) The supervisory attitude is more positive, which is a good sign
The waiting process is actually an obvious feature, and the more critical factor behind it is the attitude of the regulatory agency SEC. Today, the SEC is no longer negative about Bitcoin spot ETFs.
First, when dealing with the applications of various ETFs, we will no longer simply and rudely postpone or reject them as in the past. Instead, we will actively communicate and dialogue.An email was sent to the publisher raising questions, asking them to explain or update the terms and rules. Take the latest update of ARK, which involves a lot of new content, such as discussions on net asset value calculations, custody issues of encrypted assets, etc. Other topics of concern to the SEC include exchange fraud, concerns about the liquidity and transparency of the Bitcoin market, etc.
These issues are cumbersome but important, and the SEC may have repeated discussions with issuers on these issues - which may delay the approval process to a certain extent, but is inevitable. We wont be able to see the advent of spot ETFs in the short term, but this attitude is very positive.
Second, the SEC will not appeal against Grayscale.In the showdown between the SEC and Grayscale, each had its own victory or defeat, and the court decision in August this year did not completely side with Grayscale and ruled that the SEC lost the case; for the SEC, which has always been tough, this result is obviously not acceptable and appeals It seems to be the appropriate meaning of the title. However, no action was taken by the SEC until the October 14 appeal deadline. This change in attitude also paves the way for Grayscale GBTC’s subsequent application to transform into a spot ETF, and also opens the door for the emergence of more Bitcoin spot ETFs.
One possible reason for the above change is that the entry of traditional asset management giants such as BlackRock, Fidelity and Invesco plays a unique role in government supervision and also allows the SEC to alleviate concerns about the future market.
Conclusion
Market expectations are also optimistic about the launch of Bitcoin spot ETFs.
The spot price may not reflect the enthusiasm of direct investors for spot ETFs, but GBTC can - its discount is currently 14.78%, reaching the lowest level since the end of December 2021, and continues to narrow, which also means that traditional market investors are interested in spot ETFs. ETF expected approval attitude.
Cathie Wood, CEO of Ark Invest, said she believes the probability of the U.S. SEC approving a Bitcoin spot ETF may be increasing. She predicted that multiple Bitcoin ETFs may be approved by the end of 2023 or early 2024, predicting that Ark Invest is expected to be among the first to be approved, and that multiple (company) Bitcoin ETFs may be approved at the same time.
