Just In: SEC Reportedly Held Calls with Spot Bitcoin ETF Filers

The US Securities and Exchange Commission (SEC) reportedly held a joint conference call with spot Bitcoin ETF filers. Fox Business’ senior correspondent, Charles Gasparino, shared an update on the development.

Calling it a “rare joint conference call,” Gasparino noted that it is a developing story. He previously underlined that the decision on the spot ETF could come by January 10 and would decide retail investors’ access to crypto.

Also Read: BTC Spot ETF: Theories Emerge About SEC’s Potentially Conditional Green Light

SEC ensures broker’s trading restriction

In a follow-up report, Fox’s Eleanor Terrett also shared a significant update based on sources. According to her, the call was to make sure “everyone is doing cash creates.”

Terrett revealed that the SEC’s focus during the meeting was on ensuring that issuers convert all “in-kind redemptions” from their ETF filings.

DOUBLE SCOOP: Sources that were on the call tell me it was to do with making sure everyone is doing cash creates. The @SECGov asked issuers to remove all hints of in-kind redemptions from their filings. https://t.co/hEjXBAHLpY

— Eleanor Terrett (@EleanorTerrett) December 21, 2023

Terrett explained, “It means that the issuers have to convert their Bitcoin to cash before trading shares of the ETF.”

In simpler terms, based on the report, issuers have been directed by the SEC to not use Bitcoin directly to purchase or redeem the shares. This aligns with the SEC’s current policy, which does not permit broker-dealers to engage in Bitcoin trading.

The development is significant for the cryptocurrency market as SEC’s cautious rejection in the past has converted to dialogue. By mandating cash conversions, the SEC could be aiming to mitigate the risks before an impending approval.

Report: Several calls made to exchanges

With the deadline for the SEC’s decision looming on several ETF filings, the joint conference was being considered a big step. However, Bloomberg’s senior analyst Eric Balchunas reported that it wasn’t a joint conference call between the SEC and the issuers. Instead, he reports that many separate calls were made to the exchanges and issuers on Cash Creates.

Additionally, it is being reported that the “SEC may be asking issuers to adhere to a more strict model.”

Balchunas also highlighted that the approval window of January 8-10 remains the same due to the comment period on late filers.

ETF Applications. Source: Bloomberg’s James Seyffart

There’s a particular focus on the SEC’s take on the Prime Execution Agent model. This model involves a third party buying and selling Bitcoin on behalf of the ETF, according to Bloomberg’s James Seyffart.

Based on the new guidance, filers like BlackRock might race to update their documentation. Seyffart noted that Bitwise Invest was the first to switch to the In-Kind model in this latest wave.

 This is a developing story

Also Read: US SEC Met Spot Bitcoin ETF Seekers 24 Times So Far; Approval Imminent?

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