After years of delaying and stonewalling a highly anticipated spot Bitcoin ETF, the Securities and Exchange Commission (SEC) is starting to have more productive conversations about the product with hopeful applicants.
One such hopeful is Cathie Wood, CEO of Ark Invest, who said on Monday that her company has noticed a positive “change in behavior” from the regulator.
Warming Up to a Bitcoin ETF
During an interview with CNBC on Monday, Wood noted that Ark disclosed its response last week to a previous line of questions from the SEC, which sought clarifications on what risks a spot ETF could pose to investors, and measures Ark would take to address some of them.
In collaboration with 21Shares, Ark is one of twelve investment managers racing to launch a Bitcoin ETF in the United States, including firms like BlackRock, Fidelity, Franklin Templeton, and others.
“The fact that the SEC chose to ask questions is a change in behavior,” said Wood. “Therefore, I do think hopes are rising that a – or a number of – Bitcoin ETFs will be approved.
Wood isn’t the only one to notice the shift. On Tuesday, Fidelity provided an updated prospectus to the SEC on its Bitcoin ETF application, addressing similar questions that were posed to Ark. Some of its new details included wording around the mechanics of a Bitcoin hard fork, Bitcoin custodial arrangements, adherence to GAAP, Bitcoin’s energy consumption, and others.
“More proof that potential spot Bitcoin ETF issuers are in communication with SEC regarding changes/amendments required for SEC to consider approving,” said Bloomberg ETF analyst James Seyffart about the update.
The following day, Mike Novogratz – CEO of Galaxy Digital – predicted that his and/or others’ ETF applications would be greenlighted by the SEC by the end of the year, highlighting how dialogue with the SEC “is all heading in the right direction.”
“When you go to the comment period and what they’re asking about, [it] all seems much more specific than general,” Novogratz said in a CNBC interview.
The Grayscale Lawsuit
Working in the applicants’ favor is the SEC’s recent court loss to Grayscale – the world’s largest Bitcoin fund. In August, judges unanimously ruled that the agency’s denial of Grayscale’s conversion into a spot ETF was “arbitrary and capricious” given that it had already approved similar, cash-based futures products.
As of Friday, the SEC’s window to appeal the ruling has now closed. As such, the court is poised to instruct the SEC on how to proceed with handling Grayscale’s application, which may result in outright approval.
Some have suggested that the SEC may respond to its Grayscale loss by rescinding approval for prior Bitcoin futures ETFs, though experts contacted by CryptoPotato view this outcome as unlikely.
Independent of Grayscale, Ark’s ETF application is the first to require a firm and final decision on whether or not to approve by January 10.
“A number of Bitcoin ETFs could be approved at the same time,” Wood said.
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