- Fidelity has engaged in advanced discussions with the SEC about their spot Bitcoin ETF application, presenting a unique ETF model for market exposure without direct cryptocurrency handling.
- Recent meetings and reports suggest increasing optimism for the approval of spot Bitcoin ETFs, possibly by January 2024.
In a significant development within the cryptocurrency investment space, Fidelity Investments has presented a novel spot Bitcoin Exchange-Traded Fund (ETF) model to the U.S. Securities and Exchange Commission (SEC), advancing regulatory discussions and bolstering the chances of approval.
Fidelity’s Meeting with the SEC
On December 7, the SEC disclosed a meeting with Fidelity regarding the firm’s spot Bitcoin ETF application. This meeting, which included members of the SEC’s Division of Corporate Finance and representatives from CboeBZX, focused on a proposed rule change to allow CboeBZX to list and trade shares of Fidelity’s Wise Origin Bitcoin Trust.
Fidelity’s proposed ETF model is structured to provide market exposure to Bitcoin without requiring participants to directly handle the cryptocurrency. This is achieved through a network of authorized participants, broker-dealers, issuers, and custodians who create and redeem ETF shares, alongside unregistered crypto affiliates responsible for holding and transferring the actual Bitcoin per creation/redemption orders.
Progress in Spot Bitcoin ETF Applications
The advanced stages of discussions between the SEC and various ETF applicants signal a growing optimism about the potential approval of spot Bitcoin ETFs. Unnamed sources reported to Reuters that the SEC is likely moving towards approval of these applications, focusing on key technical details of the proposals.
In addition to Fidelity, the SEC has held meetings with other applicants, including BlackRock, discussing different models for spot Bitcoin ETFs. The comparisons of cash and in-kind models during these meetings highlight the complexities and regulatory considerations involved in structuring these products.
Notably, Bloomberg ETF analysts Erich Balchunas and James Seyffart have suggested that while some brokerages may face challenges in carrying out Bitcoin transactions under current U.S. regulations, recent proposals may offer both cash and in-kind options to circumvent these hurdles.
Anticipated Approval and Market Impact
Balchunas and Seyffart estimated a 90% chance that a spot Bitcoin ETF will be approved by January 2024. This potential approval represents a significant milestone in the integration of cryptocurrency into mainstream investment vehicles, offering investors regulated and structured exposure to Bitcoin.
The advancement of Fidelity’s application and the ongoing discussions with the SEC are closely watched by the crypto community, as they may pave the way for broader acceptance and institutionalization of cryptocurrency-based financial products.