The Next Big Step for Spot Bitcoin ETFs: Final S-1 Amendments and AP Agreements Revealed!

As the deadline for the SEC's Bitcoin ETF update is today, the community is anticipating the first round of potential approvals for spot BTC ETFs in early January.

Today is the deadline for the SEC’s Bitcoin ETF update. The decision revolves around whether the ETF should be backed by actual cash or in-kind investments.

📅 29th December 2023

As the cryptocurrency community eagerly anticipates the potential approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States, today marks a significant deadline. The U.S. Securities and Exchange Commission (SEC) has set the target of final S-1 amendments for spot Bitcoin ETF applicants by December 29th. Moreover, the regulator has mandated the signing of an agreement with an authorized participant (AP) and the establishment of a cash-create redemption model – a model that the SEC favors.

So, what does this mean for the community?

Revealing the First Wave

With this deadline in place, the community is likely to find out which spot Bitcoin ETF applicants out of the total of 14 have made it into the potential first wave of spot BTC ETF approvals. These approvals are widely expected to be granted in early January. 🚀

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According to Bloomberg senior ETF analyst Eric Balchunas, many ETF applicants have updated their filings to adopt the cash-create redemption model. By December 22nd, seven applicants had revised their filings to use the cash-create model, while the other seven included both cash-create and in-kind models in their registration statements.

💡 Pro Tip: Cash-create redemption model involves the creation of new ETF shares by giving firms like BlackRock actual assets like Bitcoin, whereas in-kind creation involves intermediaries using actual assets.

The SEC’s Preference and Concerns

The SEC’s preference for the cash-create model stems from their desire to minimize the number of intermediaries that have access to actual Bitcoin during the redemption and offering process. The commission is wary of broker-dealers and intermediaries manipulating or misusing the actual Bitcoin.

Balchunas suggests that the SEC wants to “close the loop a little more” to ensure a more controlled system and limit the number of intermediaries touching the actual Bitcoin. This move is driven by concerns over money laundering as well.

💡 Pro Tip: If only trusted entities like BlackRock and Coinbase have control over the actual Bitcoin, it becomes more controllable and less prone to misuse.

APs: The Missing Pieces

In addition to adopting the cash-create model, ETF applicants must have a determined authorized participant (AP) in place by today, December 29th. The AP plays a crucial role in facilitating the creation and redemption of ETF shares.

Balchunas reveals that not many AP agreements have been signed yet, but he expects most of them to be finalized. He suggests that the two big companies likely to serve as APs for all ETF applicants are trading giants Jane Street and Virtu Financial. However, in the most recent spot Bitcoin ETF amendment filed on December 28th, ARK and 21Shares did not provide the name of an AP.

💡 Pro Tip: AP agreements are essential for the successful launch of spot Bitcoin ETFs, and trading giants Jane Street and Virtu Financial are expected to play a significant role.

Looking Ahead: The Future of Spot Bitcoin ETFs

As we approach the potential approvals of spot Bitcoin ETFs, what can we expect in the future?

Based on the current progress and the SEC’s preferences, it is evident that the commission wants to ensure a tight control over the offering and redemption processes of these ETFs. By limiting the intermediaries involved and working with trusted entities, such as BlackRock and Coinbase, the SEC aims to create a more secure and less susceptible system.

💡 Pro Tip: Spot Bitcoin ETFs are likely to pave the way for increased institutional involvement in the crypto space, providing legitimacy and stability to the market.

For more information and updates, refer to the following links:

1. Potential Approval of Spot Bitcoin ETF in Hong Kong
2. MicroStrategy’s Additional BTC Purchases
3. Spot Bitcoin ETF Will Impact Crypto Exchanges
4. SEC’s Stance on Decentralized DAOs
5. Ether ETFs Delayed

📣 Now, it’s your turn to join the conversation! What are your thoughts on the potential approval of spot Bitcoin ETFs? Do you think the SEC’s preference for the cash-create model is justified? Share your opinions in the comments below and don’t forget to hit that share button to spread the knowledge! 🚀✨

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