Spot Bitcoin ETFs Clear Major Hurdle

Securities and Exchange Commission staff told several exchanges and issuers seeking to list the ETFs that they should submit a final version of a key document as soon as Friday, according to four people familiar with the matter who asked not to be named because the discussions are private. Katie Greifeld and Bloomberg Intelligence’s James Seyffart have more.

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Once this is approved by the SEC how quickly will it take before we actually see these ETFs trading so there’s uh two big hurdles here the first one of course which uh We’ve reported right now is that uh the SEC has told filers and issuers to uh basically submit their

Final 19 b4s that is one step the thing we’re still looking out for is the amended s1s basically that still has to be approved and of course these 19 b4s need to be approved as well but what we’re hearing from our sources is that uh basically we’re getting down to the

Finish line here that they really don’t have any substantial comments any substantial feedback yet so as James alluded to uh what we could see in the next couple of hours is these final 19 b4s being submitted what’s important to note here is that it’s unclear whether basically all of the filers have heard

This whether we’re talking about some whether we’re talking about all 13 because this is a very crowded race at this point it’s a very crowded race but at the same time the SEC doesn’t want to be playing favorites necessarily and giving any one issuer a a you know a

Lead an unnecessary lead what is what does your reporting show in terms of how they’re likely to approve all these applications exactly that’s exactly what we’ve heard as well because that’s what they did with the Bitcoin Futures ETF which launched uh a little bit over two years ago of course remember pro shares

Got the lead start there they have $1.8 billion in assets uh a pretty much identical fund from Valkyrie launched a few days later they have $34 million in so they’re trying to avoid a repeat of what we saw there so again the the thinking and the consensus in the market

Is that this is a common clock that they’d uh like to approve everyone all at once here whether everyone will be ready in time all of these issuers is the outstanding question well if you had to think about who would be ready and not ready let’s kind of go through the

Stack for a minute because one matters maybe a little more than others given there’s already money in play that is gbtc that is grayscale Bitcoin trust the discount has narrowed to only 6% James how much is at risk for their investors if they are not first out of the

Gate honestly I don’t think much is at risk because even if they’re not first out of the gate ultimately they are going to convert and that discount is going to be gone um obviously it’s more at risk not for gbtc investors but for grayscale themselves because if they’re

Out in the first wave they’re almost de facto going to be the leader we’d like to look at this Market as it tends to be winter take most and the people with the most volume tends that be get more volume and dominate the space a little

Bit again there it’s winter take most so there’s plenty of room for other people to be successful um but if they go out in the first day they’re at a pretty hefty head start at over 26 billion in assets they trade over $350 million a day both in assets and trading volume

They’d be in the top 1 2% of ETFs in the US If This Were an ETF already so that’s as big of a head start as you could possibly get so the it’s possib their their situation is a little bit different from every other issuer because of the way that they filed the

The law lawsuit and they’re filing what’s known as an S3 rather than S1 there’s some slight differences so if there is a difference it might delay them a tiny bit but I think they’re likely to go out in the first day because if they’re not out in the first

Day or at least within a day or two of other ones launching there’s probably going to be another lawsuit and James uh what’s Curious here is just how much attention they were paying to every single filing every single update turns into this Market moving event is there

Any blueprint for that this have you seen anything like this I mean we’ve had new asset classes come to the ETF rapper before but I can’t remember when it has received this much attention yeah no nothing this is a one-of-one situation we’ve never seen this much interest from people that

Don’t really know much about ETFs or traditional Finance to for that matter people have become legal experts I mean I knew a lot of this stuff from a higher level I knew some of it but I’ve had to get way deeper in the wigs because our clients and just people in general are

Demanding to understand every step of the process of what’s going on here and it makes sense really I mean people have been trying to launch this thing for 10 years there’s politicians involved there’s deadlines there’s billions of dollars at stake like this is this is a big deal and there’s a reason there’s

Getting a lot of coverage and interest from both a media and asset allocation perspective so once the SEC does approve the Bitcoin ETFs and that’s a you know when not if kind of question and we’ve been deliberating on the when um how do investors figure out which Bitcoin ETF

They they want to buy I mean are we going to have a Super Bowl 2020 for full of Bitcoin ETF commercials I I I wouldn’t count out Super Bowl commercials for sure I mean we’ve already seen a whole bunch of issuers um with their own commercials I

Mean we have vanc hash deex bitwise um everyone’s doing different things to Market their their own products and like I said it tends to be winner tick most not winner tick all so right now we’re looking at 11 issuers I don’t know if there’s room for 11 different spot

Bitcoin ETF products but there’s definitely room for multiple so some people are only going to care about the fee they want the cheapest fee that’s how they’re going to get exposure some are going to care about the brand name there’s undoubtedly going to be advisers out there that just trust Black Rock and

That’s what they’re going to use or Fidelity or what have you some people are going to stick with grayscale because they’ve been using them some might want a more crypto Centric offering from somebody like bitwise or hash deex or Valkyrie and then there’s people in the middle like van and

Invesco has partnered with Galaxy so there’s no way to know how this is going to play out one of the other things I’m focused on is the issue a bunch of the the ETFs out there now you don’t actually see the onchain address so you can’t see exactly where the Bitcoin is

Maybe some of the bigger issuers aren’t going to release those addresses so you can check it yourself to see if the Bitcoin is there but some of these smaller issuers I I I’d be shocked if we don’t see a handful of these ETFs just saying here you can double check where

Whether or not we have this Bitcoin that we say we have because that’s a huge concern in the Bitcoin World they think it’s going to be paper Bitcoin and not have actually have exposure to bitcoin but I can pretty much guarantee you some of these filers are going to publish

Their their Bitcoin addresses so anyone in their mother can go on and look to make sure the Bitcoin is actually there when they say it is