Bitcoin ETF Update: SEC Seeks Public Comments on Franklin Templeton’s Spot Bitcoin ETF Proposal

The Securities and Exchange Commission (SEC) has requested public comment on its approval of Franklin Templeton’s proposed spot Bitcoin ETF, just weeks after delaying its decision. Some experts saw the move as a quick response from regulators.

The SEC’s request for feedback, especially after previous delays, is indicative of its thorough approach to the decision-making process. The committee is focused on understanding the potential risks associated with fraud and manipulation and examining its relationship with Coinbase, which would serve as custodian for the proposed funds and ETFs if they are approved.

“The Commission is providing notice of the grounds for disapproval that it is considering,” the SEC said in the filing. The agency aims to ensure that the applications meet the requirement that “the rules of a national stock exchange should be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘protect investors and the public interest.'”

The public has 21 days to comment on the proposal, followed by two weeks for a response. To date, the SEC has postponed decisions on all applications for spot Bitcoin funds and has not approved any.

The SEC is also considering a proposal for the Hashdex Bitcoin Futures ETF, which would convert the ETF listed on the New York Stock Exchange into a partial spot product, and is soliciting public comment on the proposal.

The SEC’s recent action against the Franklin Bitcoin ETF is notable for its swiftness. James Seyffart, ETF analyst at Bloomberg Intelligence, expressed surprise at the SEC’s quick move. This is primarily because Franklin Templeton did not file an updated Form S-1 pending SEC action. Seyffart observed that the amended Form S-1 filed by Franklin Templeton closely mirrors the language of the creation/redemption process used by many others, allowing for cash and/or in-kind payments.

Scott Johnsson of Van Buren Capital speculated that the move could be an attempt to reschedule all spot Bitcoin ETFs. “They may have chosen to do this early, closing the comment period before January 10th to approve everyone at the same time,” Johnsson suggested.

The SEC’s request for public comment marks an important step in its ongoing evaluation of cryptocurrency-related financial products, reflecting the growing interest and scrutiny of this rapidly evolving sector.