The Securities and Exchange Commission (SEC) is gearing up to potentially greenlight the first Bitcoin Exchange-Traded Fund (ETF) by January 10, 2024. This prospective decision looms as a pivotal milestone in the widespread acceptance of Bitcoin within the United States’ cryptocurrency realm.
Prominent financial institutions, including industry giants like BlackRock and Fidelity, have submitted nearly a dozen applications for Bitcoin ETFs to evaluate digital assets in real-time on stock exchanges. While there’s been no official statement, recent indicators from regulatory authorities suggest a positive outcome, possibly necessitating simultaneous approval of multiple applications.
If granted, this approval would provide individual investors with an economical means to engage with the world’s largest cryptocurrency. It could enable investors to trade on regulated platforms such as the New York Stock Exchange and Nasdaq, moving away from unregulated exchanges.
Subtle Difference However, a unique, slight requirement from the SEC presents a distinctive nuance in the approval process. The SEC insists that applicants for exchange-traded investment funds use cash instead of in-kind for purchasing shares, effectively nullifying the tax advantage associated with “in-kind” purchases.
This directive has prompted some applicants, including Grayscale, to advocate for a mixed approach that includes both in-kind and cash contributions to enhance a more efficient market structure.
The SEC’s preference for cash transactions is attributed to restrictions imposed on brokers and traders, barring them from directly engaging in spot Bitcoin trading. Speculation abounds that the SEC’s concerns regarding potential misuse of Bitcoin, including activities like money laundering and market manipulation, are the driving forces behind this conservative stance.
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