US Bitcoin ETF issuer advances discussions with SEC on key details

Discussions suggest that SEC may approve asset managers' applications in the New Year
An undated image displays a standing Bitcoin. — Pixabay
An undated image displays a standing Bitcoin. — Pixabay

Talks between US securities regulators and asset managers aimed at listing Bitcoin exchange-traded funds (ETF) have progressed towards key details.

According to an industry expert, the Securities and Exchange Commission (SEC) is expected to approve the products soon.

The ETF approvals of thirteen firms that track the rate of Bitcoin, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, have been pending with the SEC.

People who support the idea say that a closely monitored product, like an ETF tied to the current cryptocurrency price, is the best way for investors to put money into Bitcoin, Reuters reported while citing sources.

However, the SEC has consistently turned down such products, saying they don't meet the required standards to protect investors.

Read more: Bitcoin surpasses $40,000 amid growing momentum

In August, a court decided that the SEC was wrong to reject Grayscale's request to turn its bitcoin trust into an ETF. Since then, the SEC has been discussing important details with issuers, usually discussed later in the ETF application process, according to industry executives and SEC memos.

A bitcoin ETF would be a big change for the industry, giving cautious investors a way to access the largest cryptocurrency through the tightly regulated stock market. Demand is expected to be around $3 billion in the first few days.

The SEC has always been concerned about the risk of manipulation in the Bitcoin market. Previously, discussions were mostly educational about this concern, according to sources.

The SEC has until January 10 to decide on ARK's application, which is the first in line. Advanced discussions suggest that the SEC may approve ARK's application and possibly some of the other 12 applications in the New Year, according to those familiar with SEC memos.

These advanced talks may explain the recent surge in bitcoin prices, reaching a 20-month high this month. ARK CEO Cathie Wood mentioned last month that the nature of SEC discussions had changed, and the chances of approving several applications had increased.

"My guess is that we'll have several ETFs approved at once, which will give investors the best opportunity to compare them," said Bryan Armour, ETF analyst at Morningstar.

SEC memos reveal that leaders from BlackRock, Grayscale, Invesco, and 21 Shares (collaborating with ARK) have been meeting with SEC staff, along with their lawyers and exchange executives, since September.