- Reports suggest that the SEC was involved in discussions with crypto exchanges concerning Bitcoin Spot ETF applications.
- The SEC advised exchanges to opt for cash creates as opposed to in-kind transactions.
- Analyst Eric Balchunas interprets this move as a positive development in the space.
Crypto enthusiasts have been keenly observing the market developments over the past few months, speculating the Securities and Exchange Commission’s imminent approval of Bitcoin Spot exchange-traded funds (ETFs). While many estimate that the regulators would issue the approval at the very outset of 2024, recent reports unveiling discussions between the SEC and exchanges on ETF applications add more intrigue.
Bloomberg’s Senior ETF Analyst, Eric Balchunas, recently shared a series of threads on X (formerly Twitter), sharing insights on the “chatter” between the SEC’s Trading & Markets Division and crypto exchanges. His tweets shed light on a supposedly positive development in the market as the idea of “cash creates” suggested by the regulators could help lighten the restrictions imposed upon broker-dealers.
Reportedly, the SEC was involved in discussions with the exchanges last week, especially addressing “19b-4 filings”, signaling the advent of a new development in the ETF proposals. Generally, 19b-4 filings are used by platforms and organizations to petition the regulators for changes in rules.
As per the analyst’s tweet, the SEC advises these crypto exchanges to opt for cash creates as opposed to in-kind transactions. The regulators have also asked them to submit amendments in the following weeks. Commenting on the positive development, Balchunas stated,
Cash creates makes sense IMO bc broker-dealers can’t deal in bitcoin so doing cash creates puts onus on issuers to transact in bitcoin and keeps broker-dealers from having to use unregistered subsidiaries or third party firms to deal with the btc. Less limitations for them overall.
Further, the analyst pointed out that only 2-3 filers had shown interest in choosing cash creates, compared to the majority of applicants opting for in-kind transactions. Though the move doesn’t significantly impact the probability of the ETF approval, as per the analyst’s words, it flags positive progress in the SEC’s stance.
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