SEC Is Talking to Bitcoin ETF Contenders—Here’s What It’s Likely Saying

The Securities and Exchange Commission (SEC) is making progress in its discussions with applicants for the spot Bitcoin exchange-traded fund (ETF), with both Grayscale and Blackrock confirming meetings with the SEC to discuss their respective Bitcoin ETF applications. BlackRock has filed a second amendment to its initial S-1 registration, adding new information and specifics regarding potential risks and uncertainties.

The amendment highlights the risk of Fedwire and SWIFT outages, potential disruptions to the Bitcoin network, and other cybersecurity concerns. Additionally, the fund has made specific references to the CME CF Bitcoin Real Time Index (BRTI) as a source of reliable intraday price information, as well as highlighting the due diligence performed by market makers in ensuring that funds are not associated with unlawful or criminal activity.

BlackRock’s registration also discloses that the custodian, Coinbase Custody, has insurance coverage of up to $320 million to cover losses of digital assets it holds on behalf of clients. However, BlackRock does not guarantee coverage for shareholder losses. Furthermore, the new version of the registration makes it clear that in the event of the ETF’s dissolution, shareholders are not entitled to any of the Trust’s underlying Bitcoin holdings.

Regarding Bitwise’s application, the fund has made the straightforward change of its potential fund name from “Bitwise Bitcoin ETP Trust” to “Bitwise Bitcoin ETF.”

While the SEC still has a month to make a decision on the Bitcoin ETF applications, investors have been showing increased interest in crypto exchange-traded products, with significant cash inflows recorded. Despite these developments, there are no guarantees that a spot Bitcoin ETF will be approved any time soon.

The recent changes offer additional context to the wave of delays announced last month, signaling a careful consideration of the Bitcoin ETF applications by the SEC. However, the final outcome remains uncertain. As discussions continue, investors are advised to stay informed and remain wary of potential risks.

Please note that historical background on spot Bitcoin ETFs may be necessary to better understand the significance and impact of these developments. For daily updates on this and other cryptocurrency news, subscribe to our newsletter.

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