Experts are increasingly confident that a spot <a href="https://en.bitcoinhaber.net/bitcoin-fees-reach-six-month-high-as-interest-in-ordinals-rises”>Bitcoin ETF approval by the SEC is imminent, expected before January 10th. The deadline corresponds to the final decision date for the application by Cathie Wood’s Ark Investment Management and 21Shares. This approval is anticipated to catalyze institutional influx into cryptocurrencies.
Approximately a dozen companies, including giants like BlackRock and Fidelity, have applied for a spot bitcoin ETF. Despite their confidence in approval, SEC officials remain silent on the matter. SEC Chairman Gary Gensler appears compelled to approve the decision, which would facilitate institutional entry into the crypto market, even though he may not be pleased with the outcome of the GBTC case months ago.
A spot Bitcoin ETF would offer institutional investors a less costly and secure way to invest in Bitcoin compared to futures ETFs. It would also signify the US’s acknowledgment of Bitcoin’s legitimacy, with trades occurring through highly regulated companies on exchanges like the New York Stock Exchange and Nasdaq.
One notable detail is the involvement of BlackRock, the world’s largest asset manager, in issuing an ETF. The SEC has an unusual requirement for ETF structuring, insisting that applicants use cash to purchase ETF shares, not the underlying Bitcoin asset. This “cash creation” method means issuers would have to exchange Bitcoin for cash with every transaction, a complex yet not significantly impactful process for investors who prefer not to hold physical Bitcoin.
There is a tax implication concern, as securities lawyers point out that investors could lose a significant tax advantage. “In-kind” purchases are not taxable events, but selling Bitcoin for cash to buy ETF shares would be. Despite these discussions, ETF issuers seem to be accepting the SEC’s terms to avoid delays in approval. The industry expects a favorable outcome, especially after a court deemed the SEC’s rejection of Grayscale’s application to convert its GBTC Trust into a spot Bitcoin ETF as “arbitrary and capricious.”
