Analysts said that the postponement of bids for Franklin Templeton and Hashdex ETFs has created a clear path for simultaneous approvals of Bitcoin exchange-traded funds (ETFs) in the United States.
“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,” said Bloomberg ETF analyst James Seyffart in a social media post.
The Securities and Exchange Commission (SEC) postponed its decisions on the applications 34 days before the deadline of January 1, 2024. Seyffart and another Bloomberg ETF analyst, Eric Balchunas, had estimated a 90 percent chance of Bitcoin ETF approvals by January 10, 2024.
Seyffart suggested that the delays related to Templeton-Hashdex indicated a probable strategy to prepare all applicants for potential approvals by the deadline.
Balchunas agreed with Seyffart’s opinion that the SEC was likely aiming to clear the path, saying, “Prob looking to get them out of the way, clear runway.”
Unlike Seyffart and Balchunas, commercial litigator Joe Carlasare believes that the delays raise the chance of approvals in March 2024. He pointed out that the comment period for Franklin’s ETF bid had been extended until January 3, 2024, and the SEC usually takes a maximum of three weeks to review comments.
“The SEC typically reviews comments for at least 2-3 weeks. Therefore, although it’s not guaranteed, this increases the probability of a March approval,” Carlasare said.
He emphasized that January remained the probable choice and said it might happen approximately on January 5 or 8.
On November 28, Franklin updated its Form S-1 for its ETF, a document registering securities with the SEC. Seyffart had noted earlier that it was the only bidder that hadn’t submitted an updated prospectus yet.
Balchunas expressed support for all ETFs launching together. However, he noted it might seem unfair if Franklin is permitted to launch its ETF on the same day as other providers, considering its late submission.
The SEC is reviewing 12 spot Bitcoin ETFs, including proposals from Grayscale and BlackRock. Most of these ETFs have final decision dates in March, except for ARK Invest’s bid, which the SEC needs to approve or deny by January 10, 2024.
The SEC has asked for public comments on forms from Franklin Templeton and Hashdex, which are required for their ETFs to be listed and traded. The period for comments and responses will be 35 days.
The agency asked for written comments on both proposals regarding the approval or denial of the applicants’ Forms 19b-4.
SEC Form 19b-4 is a public disclosure sanctioned by the SEC’s Trading and Markets Division, distinct from Form S-1, which is the offering prospectus requiring approval from the Corporate Finance Division. The SEC’s requests allow a 35-day open period from their publication in the Federal Register for both comments and responses to comments.
Public commenters are asked to evaluate whether the funds could be manipulated and if the hosting exchanges are sufficiently large.
Commenters on Franklin Templeton’s proposal are also requested to discuss potential price manipulation in the Bitcoin market. They should consider the company’s surveillance sharing agreement with Coinbase, which assists in price discovery and enhances efforts to identify manipulation and fraud.
Hashdex’s proposed fund structure is more intricate compared to Franklin Templeton’s. The Hashdex Bitcoin ETF is designed as a futures ETF that holds actual BTC. Instead of relying on a Coinbase surveillance sharing agreement, Hashdex plans to obtain BTC from various exchanges on the CME and solely depend on that method for pricing.
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