The United States Securities and Exchange Commission (SEC) has issued a deadline for the amendment of the spot Bitcoin ETF applications. According to Fox Business Journalist Eleanor Terrett on X (formerly Twitter), the agency has set the deadline to Friday, December 29.
Terrett noted that the agency has confirmed that only the firms that successfully submit their final S-1 amendment forms by the impending deadline will be considered in the first wave.
Spot ETFs Amendment
Last week, it was disclosed that the SEC officials have meetings with leading financial entities including Blackrock, Ark, and Grayscale concerning their spot Bitcoin ETF proposals. Some details of the meeting include the confirmation that the SEC plans to begin approving the ETF applications in early January and the proposal amendment which expects firms to address comprehensive details, such as technical specifications, fee structures, and initial funding strategies for these ETFs.
Following their discussions, firms such as BlackRock, and Bitwise, have adjusted and submitted their S-1 application form to the agency’s requirements.
SEC Stance on ‘In-Kind’ Creation Model
Stating an important requirement in the application amendment, Terrett mentioned the SEC stance regarding the “in-kind creation” model added “the filings cannot mention in-kind creation or they will be rejected”.
In-kind creation refers to a portfolio of securities and the cash component to be delivered to the Asset Management Company, by an authorized participant (AP) either on its account or on behalf of its clients for the creation of ETF units.
The In-kind creation allows investors to redeem ETF shares for physical Bitcoin rather than a cash equivalent, offering direct exposure to cryptocurrencies without custody.
BlackRock had earlier expressed a strong preference for the in-kind creation structure however, the agency is not obliging. The SEC’s disapproval of this model implies that it does not want broker-dealers to handle cryptos directly. Therefore, issuers who fail to embrace the SEC model of fiat-based Cash Creates might have their application rejected.
Known for its cautious approach towards digital assets, the SEC deadline for Spot ETFs Amendment signals a crucial shift. The cryptocurrency industry and financial markets are eagerly awaiting the agency’s decisions in early January, which could potentially herald a new era in the global financial system.
