Yesterday, November 28, the United States Securities and Exchange Commission (SEC) delayed its decision on the proposed spot Bitcoin exchange-traded fund (ETF) applications by Franklin Templeton and Hashdex. These delays extend the timeline for the last two of 12 spot Bitcoin ETF applicants, who were awaiting their second deadline decision by January 1. Except for ARK Invest, which has its final deadline on January 10, all other applicants are now waiting for their third deadline.
The SEC is seeking public input on these proposals by requesting written comments on the applicants’ Forms 19b-4. This form is a regulatory document for listing and trading securities, which is separate from Form S-1, the offering prospectus. The SEC has opened a 35-day period for both comments and responses to comments, starting from their publication in the Federal Register.
Bitcoin ETF Approval Between January 2-10?
James Seyffart, a Bloomberg ETF analyst, expressed surprise at the SEC’s early decision on Franklin Templeton’s application. He posted on X, “Update: Wow. SEC went super early on Franklin. They weren’t due for another decision until Jan 1. Notably Franklin is the only issuer who didn’t submit an updated S-1 yet. Wonder if that has any impact here. ” Seyffart suggested that this move might set the stage for a wave of approvals in early January.
Further analyzing the situation, Seyffart hypothesized on X about the SEC’s broader strategy: “This delay on Hashdex all but confirms for me that this was likely a move to line every applicant up for potential approval by the Jan 10, 2024 deadline.” He cautioned, however, that this is only for the 19b-4 approvals and that the SEC is not yet ready to approve the S-1s, adding, “So approval could happen here without immediate launch. They could still be denied.”
Scott Johnsson, a finance lawyer at Davis Polk, provided his insights into the SEC’s early decision. He suggested that the early decision was likely aimed at concluding the comment period before January 10, to enable simultaneous approvals. He explained:
Really the only way it makes sense. Pretty sure we can lock this one up. […] The issue was Global X had a comment period ending December 29. So, if the SEC wanted to approve all at the same time, they had to do this. […] This sets up an approval open period sometime after Jan 2 and before Jan 10. Or more accurately no later than Jan 10.
In response to a query about the rationale behind the delay, Johnsson elaborated that the second deadline for Franklin Templeton and Hasdex was January 1. “It requires a 35 day comment period during which the SEC could not approve them. Global X is currently in a comment period til EOD Dec 29. That’s the Friday of a holiday weekend and the SEC will want to cushion at least a few days to review comments received. So unless they were going to approve over a holiday weekend with little opportunity to review Global X comments, this was the sensible choice,” Johnsson remarked.
Assuming the SEC wants to line up all 12 applicants, they had to start the clock early on Hashdex and Franklin for their 35-day deadline so that it would end around January 2. “Leaving a week to issue simultaneous approvals before the Ark Jan 10 deadline,” Johnsson concluded.
Interestingly, Franklin Templeton has also submitted an updated prospectus for their spot Bitcoin ETF yesterday. Seyffart pointed this out on X, saying, “Earlier today, I said that Franklin was the only filer that had not yet submitted an amended S-1. It just dropped a minute ago.” This submission reinforces the narrative that the SEC is preparing to align the approval of all 12 spot Bitcoin ETF applicants, aiming for a uniform launch date to maintain fairness in the race for the first spot Bitcoin ETF.
At press time, BTC traded at $38,080.
