The U.S. Securities and Exchange Commission (SEC) recently delayed filings for Grayscale's Ethereum Futures ETF and Hashdex's Bitcoin Spot ETF.
This decision sparked a debate about the spot Bitcoin ETF launch. Bitwise Invest researcher Ryan Rasmussen offered an in-depth explanation of this process.
According to the researcher, Exchange Traded Funds (ETFs) are generally registered under the Investment Company Act of 1940. These “1940 Act” ETFs have a simple approval path. Companies file an application with the SEC, and it automatically goes into effect after 75 days unless the SEC intervenes.
However, spot Bitcoin ETFs, like all spot commodity ETFs, are traded under the Securities Act of 1933. The “1933 Act” structure does not allow applications to take effect automatically after 75 days. Instead, the SEC must affirmatively approve a 1933 Act application before initiating it; This is a process that can take up to 240 days.
The review process under the 1933 Act follows a specific timetable. Initially, the company wishing to launch an ETF files a prospectus with the SEC describing the fund they wish to launch. Then, the exchange on which the ETF will be traded, such as the New York Stock Exchange, files a “19b-4” application. The 19b-4 filing is a petition to the SEC to allow the ETF to be listed and traded on the exchange.
Within 15 days after the 19b-4 is filed with the SEC, the application is published in the Federal Register, the U.S. government's official record of government actions. From that point, the SEC has up to 240 days to approve or deny the application.
According to the analyst, even if the SEC allows the latest BTC ETFs to move to the next stage, this does not mean that the probability of approval of these applications will increase. According to Rasmussen, the latest postponement should therefore not be interpreted in a positive or negative way.
Historically, the SEC has extended review periods for spot BTC ETF applications to or near the full 240-day period. However, there is no guarantee that this will always be the case in the future.
*This is not investment advice.
