- SEC Chair Gary Gensler said that the agency will take "a new look” at Bitcoin ETF applications following its courtroom defeat by Grayscale.
- The SEC has met with various potential Bitcoin spot ETF issuers since the beginning of December, including BlackRock.
- New filings hint that the SEC is sorting out final details with potential issuers.
Odds that the US Securities and Exchange Commission will greenlight the slate of Bitcoin spot exchange-traded fund applications on its desk just went from high to even higher.
Hype surrounding the potential approvals mounted after a CNBC interview with SEC Chair Gary Gensler, where he said he was taking a “new look” at the issue.
“We had in the past denied a number of these applications, but the courts here in the District of Columbia weighed in on that,” he said on Thursday. “So we’re taking a new look at this based upon those court rulings.”
An appeals court ruled in August that the SEC had wrongfully denied Grayscale’s application to convert its Bitcoin Trust into a spot Bitcoin ETF.
The agency notably decided not to appeal the ruling — signalling to markets that change was afoot and the regulator may approve the ETF filings.
The SEC has been taking meetings with different ETF issuers since the beginning of December, including BlackRock, Grayscale, Franklin Templeton, and Fidelity.
“The SEC is busier than Santa’s elves,” commented Bloomberg Intelligence ETF expert Eric Balchunas on X.
The meetings may be working out the final details of the ETF offerings, adding to speculation that a spot Bitcoin ETF is essentially a done deal.
Valkyrie filed a new document on Thursday stating that the creation and redemption of its spot ETF shares would be settled in cash — not in-kind, meaning not in Bitcoin.
Bitwise and Invesco have made similar filings.
The difference between in-kind creates and cash creates is particularly salient from a tax perspective, Balchunas and fellow ETF expert James Seyffart said.
Underlying assets exchanged for shares of an ETF is a non-taxable event. But if an ETF uses cash for creations and redemptions, the fund must buy and sell Bitcoin, therefore exposing itself to capital gains distributions.
Balchunas said the SEC likely favours cash creates because in that system, only the ETF issuer handles Bitcoin — not any intermediaries.
Seyffart and Balchunas have said the SEC has a 90% chance of approving spot Bitcoin ETF applications by January 10.
Tom Carreras is a Markets Correspondent for DL News. Got a tip about the SEC, Gensler, or Bitcoin spot ETFs? Reach out to tcarreras@dlnews.com
