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An update regarding the pursuit of SEC approval for Bitcoin ETFs that are spot on

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    We have been writing for years about what had become an almost quixotic quest for U.S. SEC approval of a spot Bitcoin ETF (see one such post here). The D.C. Circuit’s decision in the Grayscale case (see post here) was a clear repudiation of the SEC’s position and infused the industry with hope that such approval might finally be forthcoming. Though it has not happened yet, this post provides an update on this topic.

    There are currently nine applications before the SEC seeking approval for spot Bitcoin ETFs.

    The Securities Exchange Act of 1934 sets forth certain deadlines by which the SEC must act, but, along the way, there are certain times at which the SEC can extend the time in which it must respond. Last week, with the government shutdown looming, the SEC acted earlier than it might otherwise have to extend the deadline on two of the applications. The SEC extended the deadline for Global X’s application from October 7, 2023 to November 21, 2023. The deadline for Ark Investment’s ARK 21 Shares Bitcoin ETF was extended from November 11, 2023 to January 10, 2024.

    On September 26, 2023, four members of the House — two Democrats and two Republicans — wrote to SEC Chairman Gary Gensler, urging him to approve immediately the listing of the spot Bitcoin ETFs. In doing so, they noted the court’s decision in Grayscale that stated that a “spot bitcoin ETP is indistinguishable from a bitcoin futures ETP,” which the SEC has approved.

    The letter was sent just before Chairman Gensler’s testimony before the House Financial Services Committee on September 27, 2023. Despite the letter, the Chairman said during his testimony that the SEC had not yet decide what to do in response to the Grayscale decision.

    Relatedly, on October 2, 2023, Grayscale announced that it was seeking approval to convert its Ethereum Trust to a spot Ether ETF. The Trust, similar to its Bitcoin Trust, invests in Ether future contracts as an indirect means of trying to mirror the ETF market. But the spot ETF will be able to invest directly in ETH. The Ethereum Trust is valued at almost $5 billion.


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