October 13, 2023

Positive Developments for Bitcoin Spot ETF Approval in January 2024

Bloomberg analysts have predicted a 90% chance of approval for a Bitcoin spot exchange-traded fund (ETF) by January 2024, citing constructive engagement between Ark Invest, 21Shares, and the Securities and Exchange Commission (SEC). This promising outlook comes despite a history of high-profile rejections for spot Bitcoin ETFs.

Ark Invest's recent SEC meetings suggest significant progress in the approval process, with additional disclosures and extensive context provided in their revised prospectus, spanning at least five pages. This indicates that the SEC has requested more information on the proposed Bitcoin ETF, a typical precursor to regulatory approval. Analysts view this back-and-forth between sponsors and regulators as a positive sign, signaling a return to normal procedures for new launches, particularly in the context of spot bitcoin ETF applications.

The SEC, as a disclosure-focused regulator, is expected to ensure proper risk assessment without evaluating the investment's merits itself. The recent revisions to the prospectus suggest that the SEC is diligently fulfilling this role while assessing the Bitcoin ETF.

Moreover, in a separate development, the SEC has chosen not to appeal a court decision regarding Grayscale's Bitcoin spot ETF case. Grayscale had sought to convert its Bitcoin Trust into a Bitcoin spot ETF but faced initial rejection from the SEC. Grayscale contested this decision in court, and in late August, the court ruled in favor of Grayscale, asserting that the SEC's rejection was unjust.

Today marked the deadline for the SEC to appeal this court decision, but the SEC opted not to challenge it. This decision not to appeal is seen as a positive signal for the likelihood of Bitcoin spot ETF approvals in the future, as it suggests the SEC may be more amenable to such financial instruments in the future.

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