The U.S. Securities and Exchange Commission (SEC) is taking significant strides in assessing the Bitcoin exchange-traded fund (ETF) applications put forth by Franklin Templeton and Hashdex. This has led to speculation that the SEC might be laying the groundwork for potential approvals of spot Bitcoin ETFs in early January 2024, following previous delayed decisions on applications from two other potential issuers.
SEC Invites Public Feedback
On November 28, it was revealed that the SEC is seeking written comments on the Franklin Templeton and Hashdex proposals concerning the approval or rejection of their Forms 19b-4. Unlike Form S-1, which is the offering prospectus subject to approval by the Corporate Finance Division, Form 19b-4 is a public disclosure sanctioned by the SEC’s Trading and Markets Division. The SEC has set a 35-day window for comments and responses post-publication in the Federal Register.
Key Points for Consideration
For the Franklin Templeton application, the SEC has asked the public to contemplate various factors. These include potential price manipulation in the Bitcoin market, the company’s surveillance sharing agreement with Coinbase for price discovery and fraud detection, and the correlation between Bitcoin spot and futures prices.
Hashdex’s proposed fund structure, on the other hand, is more complex, structured as a futures ETF holding spot Bitcoin. Hashdex intends to acquire Bitcoin from other exchanges on the CME and will rely solely on this mechanism for pricing. The SEC is seeking opinions on the importance of CME’s size in relation to the fund structure and the availability of adequate liquidity. The public is also asked to weigh in on sponsor Toroso Investments’ calculations in determining the relationship between Bitcoin prices on the CME and unregulated exchanges, as the sponsor manages and controls the fund.
Speculation Over SEC’s Early Update
The rule changes proposed to facilitate the trading of these ETFs were submitted in late September, with the Hashdex ETF expected to be traded on the New York Stock Exchange Arca and Franklin Templeton’s on Cboe BZX. The SEC moved its decision deadline for these applications to November 15, earlier than the previously set January 1, 2024, deadline. This has led ETF expert James Seyffart to speculate that the SEC might be aligning applications for potential comprehensive approvals for all 12 issuers, including BlackRock and Grayscale. However, these are educated guesses based on SEC procedures and do not guarantee a definitive timeline for decision-making.
Meanwhile, Bitcoin’s price was up 3% at the time of reporting, trading above $38,000. Bitcoin has experienced three consecutive positive months, driven by bullish sentiment surrounding the potential approval of spot Bitcoin ETFs.
For those interested in keeping a close eye on the Bitcoin ETF SEC saga, the cryptoview.io application provides a convenient platform to track these developments in real-time.
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