The first US spot Bitcoin exchange-traded funds (ETFs) are on the verge of launch. The products will offer investors a way to add Bitcoin risk to their portfolios without the need to buy and hold Bitcoin. Investors will also be able to take full advantage of the market without the additional hassle of figuring out how to use a hardware wallet or private keys. Thus, the crypto ecosystem will become a bit more legitimate.
Firms looking to launch spot Bitcoin exchange-traded funds cleared a major hurdle this week on their way to gaining approval from US regulators in the coming days.
Securities and Exchange Commission (SEC) staff told various exchanges and issuers seeking to list ETFs that they must submit the final version of the key document by Friday, Bloomberg reported, citing four people familiar with the matter who requested anonymity because the discussions were private. Two of the sources stated that the staff did not provide additional feedback on the paperwork of many firms after the recent changes.
The documents include proposed rule changes to exchanges that would allow ETFs to trade, known as 19b-4 filings. These updated documents, including ETFs from BlackRock Inc., Grayscale Investments and others, were released Friday evening.
SEC commissioners are expected to vote on the exchange rule filings next week, according to another person following the process. Often ETF approvals can be delegated to the SEC staff without a vote of the commissioners. It remains unclear whether the SEC staff has provided additional feedback on all of the firms' 19b-4 filings.
Issuers are also required to have the SEC sign off on the final versions of their S-1 filings, the ETFs' prospectus documents. The SEC gave issuers until 8 a.m. Washington time on Monday to submit updated S-1s, one of the sources said.
While SEC approval of the 19b-4 and S-1 forms may or may not be simultaneous, S-1s are usually approved after the 19b-4s.
A representative from the SEC declined to comment, Bloomberg reported.
If both approvals are received, ETFs can start trading on the next business day.
Last week, several issuers, including BlackRock Inc. and Fidelity, submitted amended S-1 filings to name their authorised participants (broker-dealers responsible for the creation and redemption of baskets of shares for ETFs).
While this step is generally considered commonplace in traditional ETF formations, it has attracted attention in Bitcoin ETF applications because some industry observers have expressed concern that Bitcoin funds will have a more difficult time attracting broker-dealers.