SEC hints at cash transactions for Bitcoin ETFs, signaling a potential approval path, with key decisions expected by early next year.
As reported by Bloomberg analyst Eric Balchunas, the SEC recommends spot Bitcoin ETF candidates using cash transactions rather than asset swaps. Participants in this technique send cash in return for ETF shares, a change from the normal practice of exchanging assets such as Bitcoin for shares.
Because broker-dealers normally don't deal with Bitcoin directly, this cash-based solution could be favorable for spot Bitcoin ETFs. It simplifies operations for brokers and minimizes reliance on unregistered entities, leading to fewer limits in processing these ETFs.
Nearly all existing applicants had planned asset exchanges rather than cash transactions.
They may need to adjust their filings accordingly, but this is not an issue for Balchunas. He sees it as a favorable indicator, signaling that these ETFs may be approved.
Despite the fact that Balchunas' story is based on unproven rumors, the SEC's recent involvement with ETF applications provides some validity. The SEC's decision on a spot Bitcoin ETF will probably come early next year, with ARK Invest's application facing a major deadline on January 10, 2024.