Start your engines: Deadlines to watch for in the bitcoin ETF race

Hype around spot bitcoin ETFs has spiked in the last month, but patience from prospective issuers and industry watchers will be key as the SEC reviews the latest wave of filings. 

The SEC officially added Bitwise’s proposed spot bitcoin ETF to its federal register on Tuesday — triggering the start of a 240-day clock for the SEC to make a ruling on the proposal — though there are other deadlines to keep an eye on.

Similar funds by BlackRock, Fidelity and others are expected to be added to the register in short order, initiating the countdown for rulings on those as well.

Though many are paying attention to the SEC’s ruling schedule for BlackRock’s planned spot bitcoin ETF — the perceived favorite by some to launch first — an unrelated deadline in mid-August could send a signal to the asset manager and other issuers. 

Deadline coming for proposal by Ark Invest, 21Shares

The SEC has until Aug. 13 to essentially approve, deny or delay a bitcoin ETF by 21Shares and Ark Invest.

The deadline represents the second stage of a 240-day process broken into four periods — 45 days, 45 days, 90 days and 60 days. At the end of the first three periods, the SEC must either allow the planned product to launch, block it from doing so, or ask for more time. 

The SEC cannot ask for more time at the end of 240 days — a period set to expire on Jan. 10.  

Switzerland-based 21Shares and New York-headquartered Ark Invest together refiled for a spot bitcoin ETF in April after the SEC rejected its previous attempt in March 2022. The latest proposal was published to the federal register on May 15, setting up a June 29 initial deadline — 45 days later — for the SEC. 

As expected by many industry watchers, the SEC requested more time. The ruling came two weeks before the deadline.  

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” the June 15 filing states. 

Aug. 13 marks 45 days from the June 29 deadline. By that date, the SEC will either issue a ruling on the planned product or request an extension for further consideration.

The initial rulings are often telling of how the SEC will treat the proposal later on, industry watchers said. 

“It’s exceedingly rare for the SEC to approve an ETF filing after so much obvious angst, with multiple extensions and filing/re-filings and so on,” according to Lara Crigger, editor-in-chief at data firm VettaFi. 

The process has changed from years ago when the SEC would let ETF proposals “live in SEC limbo” for years instead of being denied, Crigger added. Such was the case with cannabis ETFs until 2017, when the ETF Managers Group was finally able to change its Latin America Real Estate ETF (LARE) to the ETFMG Alternative Harvest ETF (MJ). 

“They are now forced to make a decision one way or another,” Crigger told Blockworks. “Hence, the extensions, withdrawals, re-filings, and so on.”  

Bloomberg Intelligence analyst James Seyffart said he is paying attention to the SEC’s decisions early in the 240-day window.

“The odds of the SEC — after going through that process of the 45-day period, 45 days, 90 days and 60 days — then all of a sudden the SEC accepting and approving seems a little skeptical to me if this surveillance-sharing agreement is the silver bullet we’ve been looking for,” Seyffart said earlier this month on the ETF Prime Podcast.

SSA at the heart of latest bitcoin ETF filings

A surveillance-sharing agreement, or SSA, is at the center of the active spot bitcoin ETF filings. 

Read more: How ‘surveillance-sharing’ is designed to deter bitcoin ETF manipulation

In a filing on June 15, Nasdaq, the potential listing exchange for BlackRock’s spot bitcoin ETF, disclosed its readiness to establish a surveillance-sharing agreement with “an operator of a US-based spot trading platform for bitcoin.”

The company later amended filings to name Coinbase as the platform. 

Cboe amended filings last week on behalf of Ark Invest and 21Shares — as well as several other fund groups — stating in the latest documents that it “reached an agreement on terms,” with Coinbase to enter into SSAs.

“They can delay again and say we need to see the actual SSA,” Seyffart added on the podcast. “And then we can get to another deadline and see what happens there.”

Other deadlines become clearer 

The US securities regulator last week formally acknowledged the bitcoin ETF applications by Bitwise, BlackRock, Fidelity, Invesco, WisdomTree and VanEck. 

The step precedes the SEC publishing the proposals to the federal register — an action that initiates the 240-day clock for it to rule on the proposals.

Bitwise’s proposed ETF appeared on the federal register Tuesday.

Unless the SEC publishes the other proposals to the register today, there won’t be a “common clock” for the latest wave of filings, Seyffart said in a Tuesday tweet — meaning applications could be ruled on in the order they were filed.

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Bloomberg Intelligence analysts believed such a “common clock” might indicate positive news for ultimate approval on the same day, he added.

“This obviously doesn’t mean definitive approval or denial either way,” Seyffart said in a separate tweet. “We were just just looking for any indication as to which way they may be leaning. But the SEC isn’t showing their hand.”

If the SEC takes the full 240 days to rule on the proposed Bitwise fund — and others expected to hit the federal register soon — such decisions would come in mid-March. 

Crigger said she believes approvals will be tough to achieve, noting not much has substantially changed regarding the surveillance requirements from the SEC and the regulatory landscape.

“It really does seem like would-be bitcoin ETF issuers and the SEC are at an impasse,” “Maybe they’ll refile with some tweaks. Maybe they’ll give up.”