Fidelity updates its spot BTC ETF filing, joins Ark Invest, Invesco amid SEC feedback

10/18/2023 01:03:39 GMT|ByLockridge Okoth

Fidelity has joined Ark Invest and Invesco in filing an updated version of its spot BTC ETF.
It comes weeks after the US SEC sent letters to the prospective issuers, with requirements that would warrant an approval.
Experts say it is a good sign, evidence of ongoing consultation between the commission and institutional players.

Fidelity Funds Management LLC has joined the list of firms believed to be in communication with the US Securities and Exchange Commission (SEC), after it filed an amended version of its spot Bitcoin Exchange-Traded Fund (ETF).

Also Read: Invesco Galaxy updates its Spot Bitcoin ETF S-1 after Ark Invest, analysts say more to come

Fidelity joins Ark Invest, Invesco in updating spot BTC ETF filing

Fidelity has joined Ark Invest and Invesco, making it three firms that have been confirmed to have updated their Spot Bitcoin ETF filings with the SEC. James Seyffart, an ETF specialist with Bloomberg Intelligence says this is a good sign as it signifies actual engagement between the commission and the applicants.

More proof that potential spot #Bitcoin ETF issuers are in communication with SEC regarding changes/amendments required for SEC to consider approving. Positive signs IMO https://t.co/2LYU5aTlyJ
— James Seyffart (@JSeyff) October 17, 2023

Ark Invest refiled on October 12, a day before Invesco Galaxy, reinvigorating hope of an approval to come soon. With all eyes now on the SEC, the resubmissions have indicated five common denominators, which are potentially what the financial regulator is looking for in the submissions as metrics to qualify for an approval. These are:

Mechanics around hard forks
Valuation and pricing sources and adherence to GAAP
Risk disclosure around regulatory uncertainty
Mining is very energy-intensive
Risks involving illicit transactions

On mining, the commission is looking at the geographical impacts, and how the issuers would be mitigating these, especially as it pertains to its impact on the price of Bitcoin.

SEC on mining around Spot BTC ETFs

With these, the next round of amendments would provide more clarity about what the US SEC is actually focusing on, relative to issuers simply deciding to beef up disclosures now that approval is more likely. Nevertheless, onlookers anticipate a batch of applications going live in Q1 of 2024, the earliest.

My base expectation is a batch will go effective Q1, but there’s still some uncertainty.
— Scott Johnsson (@SGJohnsson) October 17, 2023

With all these developments, pressure is building on SEC chair Gary Gensler as the market now looks forward to a definite approval. It is now not a matter of if, but when the SEC will finally green light a Spot BTC ETF.

Crypto ETF FAQs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Is Bitcoin futures ETF approved?

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Is Bitcoin spot ETF approved?

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

Recent Spot BTC ETF scare

Meanwhile, the market continues to heal from the October 16 scare that the commission had approved BlackRock’s iShares Spot BTC ETF. When it happened, more than $1 billion in aggregated open interest was wiped out from the market, with almost $80 million in short positions liquidated against around $18 million longs.

The market was upset at the realization that this was fake news. However, the fact that prices rallied so much was clear evidence of just how much pent-up demand there is. Hopefully, the SEC will not be using this as an excuse or an example of market manipulation and therefore course to deny the applications.

At the time of writing, Bitcoin price is hovering around $28,300, reeling from the Monday carnage and approximately 5% on the week.

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