In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) recently revealed that it held a secret meeting with Fidelity regarding the firm’s spot Bitcoin ETF application. This news has sparked excitement among cryptocurrency enthusiasts and investors alike, as it indicates that progress is being made towards the approval of a Bitcoin ETF. The meeting, which took place on December 7th, involved members of the SEC’s Division of Corporate Finance and representatives from both Fidelity and CboeBZX.
The main topic of discussion during this meeting was a proposed rule change that would enable CboeBZX to list and trade shares of Fidelity’s Wise Origin Bitcoin Trust. Fidelity’s ETF model offers exposure to Bitcoin through a unique structure that involves various industry players with distinct roles. Authorized participants and broker-dealers play a crucial role in creating and redeeming ETF shares, while unregistered crypto affiliates handle the actual Bitcoin tied to the ETF.
By utilizing this intermediary setup, market participants can gain price exposure to Bitcoin without directly dealing with the cryptocurrency itself. This approach has garnered significant interest as it provides a seamless way for traditional investors to enter the Bitcoin market. Additionally, it promotes market flow and liquidity by allowing for the creation and redemption of ETF shares based on investor demand.
Recent reports indicate that the discussions between the SEC and Bitcoin ETF applicants, including Fidelity, have progressed to advanced stages. The focus of these talks is said to revolve around “key technical details,” suggesting that the SEC is getting closer to approving the relevant ETF applications. While the SEC has not made any official announcements regarding the outcome of these discussions, unnamed sources close to the matter have expressed optimism that approval may be imminent.
In previous meetings with BlackRock, the SEC has also examined the differences between cash and in-kind models for Bitcoin ETFs. Some experts have suggested that cash models may be more feasible due to potential difficulties in executing Bitcoin transactions within the current U.S. regulatory framework. However, recent reports from Bloomberg ETF analyst James Seyffart indicate that certain proposals may allow for both cash and in-kind options, providing more flexibility for market participants.
Both Erich Balchunas and James Seyffart, prominent ETF analysts at Bloomberg, have expressed a positive outlook regarding the approval of a Bitcoin ETF. They estimate that there is a 90% chance of a spot Bitcoin ETF receiving approval by January 2024. This prediction aligns with the growing sentiment in the crypto community that regulatory attitudes towards Bitcoin and other cryptocurrencies are gradually becoming more favorable.
The SEC’s secret meeting with Fidelity regarding its spot Bitcoin ETF application is a significant development that has raised hopes for the approval of a Bitcoin ETF. The meeting signifies that progress is being made and that detailed discussions are underway. While the outcome remains uncertain, there is a general sense of optimism that a spot Bitcoin ETF could soon become a reality, opening up new opportunities for investors and further mainstream adoption of cryptocurrencies.
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