Bitcoin ETF Race Could Get Tighter After This Deadline

Bitcoin ETF contenders have until today to file last-minute changes to their applications and clear what may be the final hurdle for approval: authorized participant agreements. 

The authorized participant for an exchange-traded fund (ETF) is the organization that works with the issuer of the investment vehicle to create and redeem shares of a fund so that an investor can cash out. 

And after months of back and forth meetings between asset fund managers and the SEC, this now appears to be the final part of the application process.

The SEC last week set a deadline of December 29 for Bitcoin ETF contenders to file any changes to their applications, according to Reuters. Among the various amendments filed in recent weeks from top contenders like BlackRock and Cathie Wood’s ARK Invest, two key details have emerged: the SEC appears to be requiring that Bitcoin ETFs follow a cash model, meaning new funds are created with cash and not Bitcoin, and that they have authorized participant agreements in place.

Any applicant that fails to file an amendment by today that includes both of these provisions may be excluded from the Bitcoin ETF race, according to Bloomberg Senior ETF analyst Eric Balchunas.

In a Friday post on X (formerly Twitter), Balchunas said he expects some authorized participants to be named today—but added that it was more likely to take place just days before the launch of a Bitcoin ETF. Notably, ARK Invest and 21 Shares filed an amendment yesterday to include mention of authorized participant agreements but did not name the AP.

Experts expect a spot Bitcoin ETF to get approval in the new year. Bloomberg Intelligence analysts have said that by January 10, there is a 90% chance one will start trading.  

An ETF is an investment vehicle that tracks the value of an underlying asset, like gold, foreign currencies, or Bitcoin. A spot Bitcoin ETF is an investment fund that allows people to get exposure to the digital coin by buying shares that track the price of Bitcoin. 

Investment firms have been applying for a Bitcoin ETF since 2013, only to face rejection from the U.S. Securities and Exchange Commission. The SEC has cited concerns about market manipulation as reasons for not allowing such a product to exist in the States. 

But major Wall Street players—including the world’s biggest asset manager BlackRock—this year applied to the top regulator to release their own product. The SEC now has a long-list of applications from the likes of VanEck, Grayscale, and WisdomTree to review. 

The flurry of high-profile applicants has led market analysts to predict that the SEC will soon give the green light to such a product, which would allow traditional investors to get exposure to cryptocurrencies in a safe and regulated way.