Spot Bitcoin ETF Approval Speculations Gain Momentum

Spot Bitcoin ETF Approval Speculations Gain Momentum

3 min read

Last week, CoinPayments media reported that Bitcoin demonstrated a robust recovery, surpassing the $44,500 mark after a sudden flash crash earlier in the week. Analysts attributed this resurgence to growing optimism surrounding a U.S. Spot Bitcoin ETF approval. At the time, social media was abuzz with rumours suggesting a potential approval on Friday, January 5th, although this did not materialise. Analysts, however, indicated that the approval might be imminent in the upcoming week.

U.S. Spot Bitcoin ETF Approval: Near Final Decision

This does indeed appear to be the case as the anticipation for U.S. spot Bitcoin ETFs to receive approval has been gathering momentum, with exchanges amending documents that hint at potential approval from the U.S. Securities and Exchange Commission (SEC) in the coming days. As part of the final steps in a prolonged effort to launch Bitcoin-backed exchange-traded funds in the U.S., issuers had until Monday morning in Washington to submit any last-minute revisions to their applications.

SEC’s Critical Role in Bitcoin ETF Approval

The SEC, responsible for overseeing financial securities, holds a pivotal role in the approval process of spot-backed Bitcoin ETFs. The regulatory body has until January 10th to make decisions on the applications, with speculation suggesting that multiple decisions might be announced simultaneously.

There are two key technical requirements that must be met before a spot-backed Bitcoin ETF can commence trading. First, the SEC needs to approve the 19b-4 filings by the exchanges planning to list the ETFs. Second, the regulator must give the green light to the relevant S-1 forms, the registration applications submitted by potential issuers, which notably include industry giants like BlackRock and Fidelity.

Countdown to Potential Trading Commencement

Bloomberg News reports that the SEC is poised to vote on the exchanges’ filings, the 19b-4s, in the coming days. Subsequently, the regulator may decide on the issuers’ applications, the S-1s, around the same time. Should the SEC grant approvals for both sets of requirements, the ETFs could commence trading as early as the next business day.

A SEC representative declined to provide comments on the current status of the applications, maintaining a level of suspense in the crypto community.

The Impact of Bitcoin ETF Approval

The approval of a spot Bitcoin ETF could have significant repercussions in the financial markets and the broader cryptocurrency ecosystem, marking a significant milestone for digital assets. Firstly, it would likely attract a wave of institutional investors who have been hesitant to enter the volatile crypto space due to regulatory concerns and the lack of a regulated investment vehicle.

This influx of institutional capital could lead to increased liquidity and price stability in the Bitcoin market. Moreover, a spot Bitcoin ETF approval could enhance the overall legitimacy of the cryptocurrency sector, encouraging mainstream adoption and acceptance.

On the regulatory front, it might prompt other jurisdictions to reconsider their stance on cryptocurrency-related financial products, potentially paving the way for a more consistent global regulatory framework.  

SEC’s Historical Stance and Shifting Speculations

The SEC has been deliberating on applications for spot Bitcoin ETFs for several years, expressing concerns about Bitcoin’s volatility and the potential for market manipulation. However, speculations gained momentum since August when the SEC faced a legal setback against crypto asset manager Grayscale Investments. Many believe this loss might compel the regulator to heed the increasing demand for Bitcoin ETFs.

Market dynamics have responded to speculations of regulatory approval, with Bitcoin experiencing a notable 160% surge in the past year. Despite this, the cryptocurrency has not yet reclaimed the record highs set in November 2021 when it reached nearly $69,000. As of Monday in London, Bitcoin was trading around $43,640, reflecting a modest 1.5% dip amid a broader downturn in the cryptocurrency markets at the beginning of the working week.


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