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Spot bitcoin ETF would be ‘final seal of approval’ for institutions: Cathie Wood

source-logo  blockworks.co 06 December 2023 19:33, UTC

The approval of spot Bitcoin ETFs by the Securities and Exchange Commission could serve as “the final seal of approval” for institutions considering involvement in the crypto space, according to Ark Invest CEO Cathie Wood.

Ark Invest, in partnership with 21Shares, has a live filing in front of the agency for such a product. The deadline for the SEC to rule on the proposed Ark 21Shares Bitcoin ETF (ARKB) is Jan. 10.

The SEC allowed bitcoin futures ETFs to start trading in October 2021. Wood said during a Wednesday webinar those approvals were “interesting” given the counterparty risk for those funds — compared to a spot product backed by bitcoin held in cold storage. Most issuers seeking to launch bitcoin ETFs have named Coinbase as custodian of the funds’ BTC.

Grayscale Investments notched a court victory against the SEC in August. Judges ruled that the commission denying the conversion of the Grayscale Bitcoin ETF (GBTC) to an ETF, but allowing futures-based funds, was “arbitrary and capricious.”

“I think it’s all coming together, and if you look at our appreciation expectations for bitcoin, the biggest part of the appreciation during the next five to 10 years we think will come from institutional,” Wood added.

The executive has said the price of one bitcoin could hit $1 million or more in the long term.

Bloomberg Intelligence analysts put the odds of spot bitcoin ETF approval, by Jan. 10, at 90%.

Read more: Industry watchers pin down possible bitcoin ETF approval dates

Approval would be a change in stance for a securities regulator that has blocked dozens of spot bitcoin ETF proposals over the last decade.

But 21Shares President Ophelia Snyder reiterated previous comments Wednesday that there have been “pattern breaks” in recent months as issuers look to get these funds approved.

“If everything goes the way it always goes, you’re going to end up with the same result,” she said on the webinar alongside Wood. “I think the fact we’re seeing very material differences in this round of the spot process versus prior rounds is a very promising indication of a different outcome.”

The changes include issuers continuously updating their Bitcoin ETF filings. Industry watchers noted that this activity may signal ongoing dialogue with the SEC. BlackRock and Bitwise, for example, updated their S-1 forms Monday.

What does this mean? Without having read them — it just means that the wheel is still turning. Both the SEC and these issuers are working hard to iron things out. These filings are likely the result of many conversations and a lot of man hours on/between both sides.

— James Seyffart (@JSeyff) December 4, 2023

Among the additions in BlackRock’s amendment was the language around the firm raising $100,000 of seed capital for the fund. Such capital is used to fund creation units that allow shares to be offered and traded in the open market.

“[It’s] meaningful because it shows they are doing everything needed to launch,” Bloomberg Intelligence analyst James Seyffart told Blockworks. “But I don’t think it means much more than that.”

Other amendments have been more technical, including disclosure language around electricity usage of bitcoin mining or the impact of a digital asset being deemed a security in the future.

Interesting update to BlackRock / IShares S-1 filing regarding the concern that the SEC could take an approach that Bitcoin is a potential security 🧐

Seems silly, but apparently the SEC wants that language in there. pic.twitter.com/84sCkgFncC

— Joe Carlasare (@JoeCarlasare) December 5, 2023

The latest bitcoin ETF filing from Ark and 21Shares came in April, which was a couple months before BlackRock entered the picture — a move that spurred Fidelity, Invesco and a range of others to re-up their own bitcoin ETF efforts.

“We do think while we’re first in line that a number of the firms will be approved at the same time,” Wood said. “Depending on exactly how they filed, it could be that more than a half dozen are approved in the first go.”