Bitcoin ETF news and five most asked questions regarding spot ETF approval

Bitcoin ETF, or Exchange Traded Fund, has been the main driver of crypto markets since June 2023. So, we answered the top BTC ETF questions to help you prepare for a historic decision. 

Daily Digest Market Movers: Bitcoin ETF news December 27

The latest update in the Bitcoin ETF approval is the shift in Grayscale Investment’s approach toward the settlements of ETFs. Grayscale was bent on keeping the ETF settlements “in-kind”, but after the US Securities and Exchange Commission’s (SEC) latest announcement, the investment company has agreed to amend their ETF filing to accommodate a “cash” settlement.

Read more: Spot Bitcoin ETF may get rejected if filings do not reach SEC by new deadline

Grayscale Investments restructures ahead of Bitcoin ETF approval

• According to a December 26 Form 8-k filing, Grayscale Investments undergone underwent major board shifts as founder Barry Silbert and president Mark Murphy resigned from their director positions.
• The changes, effective January 1, 2024, see Mark Shifke, CFO of Silbert's DCG, taking the helm as chairman.
• New members Matthew Kummell and Edward McGee also join the board, signaling potential strategic adjustments for the crypto giant.

Read more: Grayscale bows to SEC’s spot Bitcoin ETF order while founder Barry Silbert resigns as Chairman

Understanding in-kind and cash settlements for Bitcoin ETF.

Investors holding a spot Bitcoin ETF can redeem it in two types – in-kind and cash. 

With the first option, upon redemption, the investor receives the equivalent amount of Bitcoin directly into their crypto wallet. However, with the second option, the investor receives the cash equivalent of their shares' value at the redemption date.

While the former method grants direct ownership of the underlying asset to the investor, it requires managing a crypto wallet and necessitates a basic understanding of crypto-related security practices.

When is the Bitcoin ETF deadline?

There are two deadlines for ETF approval. 

1. Bitcoin ETF Deadline for final amendments to spot Bitcoin ETF filings:

• This deadline is December 29, 2023.
• It was set by the US Securities and Exchange Commission (SEC) for applicants seeking approval for their spot Bitcoin ETF proposals.
• Any amendments submitted after this deadline wouldn't be considered in the initial wave of potential approvals in early January 2024.

2. Potential deadline for first approval of a spot Bitcoin ETF:

• This deadline is January 10, 2024.
• It marks the end of the statutory review period for the two first-in-line applications: Ark Investment Management's and 21Shares'.
• The SEC could either approve or reject these applications by this date or extend the review period further.

Read more: BlackRock plans to seed its spot Bitcoin ETF with $10 million; could launch shortly after approval

What is Bitcoin ETF?

A Bitcoin Exchange-Traded Fund (ETF) is a financial instrument that allows you to invest in Bitcoin indirectly, offering several advantages compared to directly owning the underlying digital asset BTC. This fund allows holders to buy and sell shares on traditional stock exchanges just like any other stock.

Why is Bitcoin ETF important?

There are several factors make Bitcoin ETFs significant:

• Accessibility: Due to the way cryptocurrencies work, purchasing and storing them is a hassle. But an ETF would sidestep these concerns and make Bitcoin investing easier and more accessible to a broader audience. It overcomes the need to set up a cryptocurrency exchange account or manage private keys, making it simpler for beginners and those unfamiliar with crypto.
• Regulation and Safety: The cryptocurrency sector is a relatively new space with fewer regulations. As a result, bad actors are dime a dozen, which is reflected in the number of hacks that occur. In 2022, $3.8 billion in cryptos were stolen, according to a Chainalysis report. However, with the approval of Bitcoin ETFs, the traditional financial regulations and protections will apply, adding an extra layer of security compared to unregulated crypto exchanges.
• Transparency: ETFs operate with higher transparency, revealing their underlying assets and holdings, unlike some aspects of the crypto market.
• Fractional Ownership: Unlike buying a whole Bitcoin, ETFs allow you to invest in smaller amounts, making it more affordable and flexible.
• Potential Market Expansion: Approval of a US spot Bitcoin ETF could significantly expand the crypto ETP market, attracting greater institutional investment and boosting Bitcoin's popularity.