The SEC continues to meet behind closed doors with asset managers to discuss key issues related to applications for a spot Bitcoin ETF. Fidelity is the latest of the Bitcoin exchange-traded fund applicants to meet again with the securities regulator.
This week, Fidelity held its second meeting with the US securities regulator, the Securities and Exchange Commission (SEC), to discuss key details regarding its application for a spot Bitcoin ETF.
Fidelity Investments is one of the 13 asset managers awaiting SEC approval to launch a Bitcoin ETF in the US market, allowing regulated access to investors to the world's largest cryptocurrency.
According to the report of the meeting held, Fidelity presented to the SEC a proposal on the creation and redemption model that its ETF will use, opting for a design in kind, similar to the one introduced by BlackRock. This redemption model will basically allow investors to redeem their shares for bitcoins.
Eric Balchunas, an ETF expert at Bloomberg, noted that Fidelity is among the asset managers that are Modifying and updating your S1 documentation, to comply with SEC requirements and to address the regulator's concerns regarding this crypto investment vehicle.
Balchunas also highlighted that the SEC has recently published new educational material and some warnings about the risks that investors are exposed to in the world of cryptocurrencies. The expert emphasized that these same actions were carried out by the SEC just before approving the launch of ProShares' Bitcoin Strategy ETF, listed on the New York Stock Exchange under the ticker BITO.
Analysts have been anticipating the potential approval of a spot Bitcoin ETF as early as next month, considering the involvement of BlackRock, which has a near-perfect track record of approvals with the securities regulator, as well as Grayscale’s legal victory over the SEC last August and the current course of action by the regulator, which continues to meet with asset managers that have pending applications to launch a Bitcoin spot ETF in the United States to discuss various matters and fine-tune some details in the filings.
Based on the above, analysts believe there is a high probability that the SEC will approve a Bitcoin exchange-traded fund on January 10.
However, some experts are also concerned about the level of centralization that Coinbase's asset manager selection as a custodian partner for its exchange-traded funds implies.
In fact, Mike Belshe, CEO of BitGo, believes that there is a window of opportunity for the SEC to reject the ETF applications in question, precisely because of the dual role that Coinbase would be playing, as a cryptocurrency exchange and custodian for Bitcoin ETFs, should the latter be approved.
Belshe him said Bloomberg reported that it’s “quite likely” the SEC could reject Bitcoin ETFs on the grounds that the crypto exchange and custody basis are not separate. “I think it’s very likely the SEC will come back and say, ‘No, you have to separate those things completely before we move forward,’” Belshe noted, emphasizing that there are many risks to Coinbase’s selection as a custody partner that are not yet understood.
Still, optimism and confidence about the potential approval of a Bitcoin spot ETF continues to grow, driving the price of Bitcoin towards new yearly highs. At press time, Bitcoin is trading on the market at $43.780 per BTC and, following the approval of an exchange-traded fund, it could break new all-time highs.
Continue reading: Will there be a Bitcoin spot ETF in January?
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