Bitcoin ETFs: Potential Launch Without SEC Public Vote

The U.S. Securities and Exchange Commission (SEC) might not hold a public vote on the approval of a spot bitcoin ETF, such as the one proposed by Ark and 21Shares, but this does not rule out the possibility of these products launching as early as this week. Casey Wagner reports on this intriguing development in the cryptocurrency sector for Blockworks.

Despite the lack of a scheduled SEC meeting before its deadline to decide on Ark and 21Shares’ spot bitcoin ETF application, the product still can start trading. The SEC’s next meeting is slated for January 11, a day after the deadline, but the agency could opt for a seriatim vote – a process that allows for votes to be collected without a public meeting.

The Seriatim Voting Process

In a seriatim vote, matters are circulated individually to each commissioner, who casts a vote before passing it on to the next one. This procedure, while not widely known, has been utilized in the past and could be a way for the SEC to approve the bitcoin ETF without a public session. However, this method has its complexities, as noted by former SEC Commissioner Luis Aguilar, who described the potential for a ‘desk drawer veto’ by commissioners.

Delegated Authority and Historical Context

Historically, the SEC has often delegated authority to its staff to decide on crypto ETFs, a move intended to conserve resources. SEC Commissioner Hester Peirce noted that many early bitcoin exchange-traded product denials were issued by staff under this delegated authority. However, this does not preclude the possibility of individual commissioners challenging these decisions and calling for a full commission vote.

Previous Commission Votes on Crypto ETFs

The SEC has voted on crypto ETF applications in the past. Notably, in January 2023, a bitcoin ETF proposal by Ark and 21Shares was denied by a vote that included SEC Chair Gary Gensler. Similarly, in 2018, under former SEC Chair Jay Clayton, the commission unanimously voted to deny the GraniteShares and ProShares bitcoin ETFs.

Looking Ahead With the SEC declining to comment on the likelihood of a vote this week, the cryptocurrency community remains in anticipation. The approval process for bitcoin ETFs has historically been a mix of staff decisions and commission votes, leaving room for various outcomes.

In conclusion, the potential approval of bitcoin ETFs without a public SEC vote reflects the evolving regulatory approach towards cryptocurrency products. While the process may seem opaque, it underscores the complexity of introducing novel financial products like bitcoin ETFs into the mainstream market. As the deadline approaches, the crypto world watches closely, hopeful yet uncertain about the future of these much-anticipated financial products.