SEC May Extend Decision Timeline for Bitcoin ETF Approval; Michael Saylor Initiates Sale of MicroStrategy Stocks Worth $216M to Acquire More Bitcoin; Fidelity and Galaxy Set Fees for Proposed Bitcoin ETFs, Awaiting SEC Approval
Possibility of Additional Time Instead of Rejection, Says Bloomberg ETF Analyst
As the January 10 deadline for the decision on Bitcoin exchange-traded funds (ETFs) approaches, Bloomberg ETF analyst Eric Balchunas suggests that the Securities and Exchange Commission (SEC) is more likely to seek additional time rather than issue a final rejection. Balchunas, along with James Seyffart, maintains a 90% probability of approval but does not raise the likelihood above this figure in case the SEC requires more time for evaluation.
Balchunas highlights the extensive efforts and resources invested by both the SEC and Bitcoin ETF issuers in the approval process, making a last-minute rejection less likely. He emphasizes the significance of the ongoing collaboration, stating that a final rejection would be a major setback:
“This would be the biggest rug pull of the last decade. Everyone worked hard on this, even on holidays. In the event of a final rejection, sadistic may not even be a strong enough word for it.”
Vetle Lunde, an analyst at K33 Research, shares a similar perspective, assigning a mere 5% probability of rejection in his market report dated January 2.
Balchunas also suggests that if the SEC issues a final rejection, fund issuers might follow Grayscale’s lead and file separate lawsuits against the regulator. Despite some public comments requesting complete ETF rejections, the overwhelming sentiment supports approval, with only a minimal number opposing based on concerns about Bitcoin’s potential misuse by authoritarian regimes.
Michael Saylor Initiates Sale of MicroStrategy Stocks Worth $216M to Acquire More Bitcoin
MicroStrategy’s executive chairman, Michael Saylor, has commenced the sale of $216 million worth of his shares in the company, stating that a portion of the proceeds will be used to acquire more Bitcoin. In a filing with the U.S. Securities and Exchange Commission (SEC) on January 2, Saylor revealed the initiation of the four-month process, beginning with the sale of the first tranche of 5,000 shares from his 315,000 stock options awards, which expire on April 30, 2024.
During MicroStrategy’s third-quarter earnings call on November 2, Saylor outlined his plan to sell 5,000 MSTR shares daily over the next four months. The primary purposes are to address personal obligations and accumulate more Bitcoin. Saylor emphasized that despite his personal sales, his stake in the company’s equity remains “significant.”
Four-Month Process to Address Personal Obligations and Increase Bitcoin Holdings
The SEC filing indicates that Saylor can sell a maximum of 400,000 shares of his vested options between January 2 and April 26, 2024. While Bitcoin experienced a remarkable 170% rally in the past year, MicroStrategy outperformed the asset by more than double, achieving a 411% gain during the same period.
MicroStrategy recently increased its Bitcoin holdings by purchasing an additional 14,620 BTC for $615 million on December 27. With this acquisition, the company’s total Bitcoin holdings now stand at 189,150 BTC, valued at approximately $8.5 billion at current prices.
Fidelity and Galaxy Set Fees for Proposed Bitcoin ETFs, Awaiting SEC Approval
The issuers of two proposed Bitcoin exchange-traded funds (ETFs), Fidelity Investments and Galaxy/Invesco, have disclosed the fees they will charge if their ETFs receive approval from the U.S. Securities and Exchange Commission (SEC). According to a report from Fortune, Fidelity’s Wise Origin Bitcoin Trust will carry an annual fee of 0.39%, while Galaxy/Invesco’s BTCO fund will charge 0.59% per year, with the fee waived for the first six months of the fund’s operation. The information is reportedly derived from a Dec. 29 court filing.
Fidelity to Charge 0.39% and Galaxy/Invesco to Charge 0.59% per Year, With Fee Waiver for First Six Months
Jane Street Capital is identified as the “authorized participant” for the Bitcoin ETFs of Fidelity, WisdomTree, and Valkyrie, indicating its role in arbitraging differences in price between these funds’ shares and Bitcoin. Valkyrie has also named Cantor Fitzgerald as a second authorized participant. For Galaxy/Invesco and BlackRock, JPMorgan and Virtu are designated as their authorized participants.
The ETFs are planned to utilize a “cash” model for creation and redemption, implying that authorized participants will deposit the cash equivalent for the desired amount of Bitcoin, which will then be used by the fund to purchase BTC. The SEC has favored this approach, expressing reluctance to allow broker-dealers to handle Bitcoin directly.
While investors anticipate the approval of a spot Bitcoin ETF in the U.S., the SEC has historically rejected several applications. However, following Grayscale’s legal victory against the SEC in August, which prompted the regulator to reconsider its rejection of Grayscale’s spot Bitcoin ETF application, the landscape has seen a resurgence of new applications and revisions from various firms, including Fidelity, WisdomTree, Invesco Galaxy, and Bitwise.
As of now, the SEC has not officially announced the approval of any spot Bitcoin ETF.
