SEC postponed decisions on seven spot bitcoin exchange-traded product proposals

The U.S. Securities and Exchange Commission on August 31, 2023 extended its initial review periods for seven proposed exchange listings designed to give investors exposure to spot bitcoin through traditional securities accounts. The separate orders covered products associated with BlackRock, Fidelity, VanEck, WisdomTree, Invesco, Valkyrie and Bitwise.

The action did not approve or reject any product. It moved the next procedural deadlines into October 2023, preserving the Commission’s options to approve a proposed exchange rule change, disapprove it or open proceedings to consider disapproval.

Seven proposals moved together

The filings involved three exchanges and seven distinct proposals. Nasdaq sought permission to list shares of the iShares Bitcoin Trust and Valkyrie Bitcoin Fund. Cboe BZX submitted rule changes for the Wise Origin Bitcoin Trust, VanEck Bitcoin Trust, WisdomTree Bitcoin Trust and Invesco Galaxy Bitcoin ETF. NYSE Arca proposed listing the Bitwise Bitcoin ETP Trust.

For the iShares, Wise Origin, VanEck, WisdomTree and Invesco Galaxy proposals, the SEC designated October 17, 2023 as the next decision date. The Bitwise deadline became October 16, 2023, while the Valkyrie deadline became October 19, 2023. These were intermediate deadlines, not necessarily the final dates on which the Commission had to reach an ultimate decision.

Each order relied on the review mechanism in Section 19(b)(2) of the Securities Exchange Act. That provision allowed the SEC to extend the initial 45-day period to as many as 90 days after publication of a proposed exchange rule change when the agency found additional time appropriate. The orders used substantially the same explanation: the Commission needed sufficient time to consider the proposal and the issues it raised.

Why the timing mattered

The coordinated extensions arrived during an unusually consequential week for the institutional bitcoin market. On August 29, 2023, the U.S. Court of Appeals for the District of Columbia Circuit granted Grayscale Investments’ petition for review and vacated the SEC order that had rejected NYSE Arca’s proposal to convert Grayscale Bitcoin Trust into an exchange-traded product.

The court concluded that the SEC had not adequately explained its different treatment of Grayscale’s proposed spot-bitcoin product and previously approved bitcoin-futures products. That judgment did not approve Grayscale’s proposal or compel the Commission to approve the seven proposals addressed on August 31. It did, however, sharpen the institutional significance of the SEC’s next procedural choices.

The seven extensions also showed that the agency was managing a group of closely related proposals on broadly parallel schedules. That alignment mattered to exchanges and sponsors because approval of one applicant before similarly situated rivals could confer a commercial timing advantage. The August 31 record alone does not establish that the SEC had committed to a simultaneous final decision.

What the orders did—and did not—establish

The SEC orders concerned exchange rule changes, commonly called 19b-4 proposals. They were not declarations that the associated trusts’ separate securities-registration materials were effective, and they did not authorize shares to begin trading.

Nor did the extensions resolve the central policy dispute surrounding spot bitcoin products: whether an exchange could satisfy statutory requirements intended to prevent fraud and manipulation and protect investors and the public interest. The August 31 orders supplied no substantive conclusion on that question.

No bitcoin return is asserted here. Contemporaneous reports described a price decline after the announcements, but a continuously traded global asset has no single universal daily close, and an intraday reaction cannot by itself establish that the SEC orders caused the move. The verifiable event-day conclusion is narrower: on August 31, 2023, the Commission preserved further review of seven prominent attempts to place spot-bitcoin exposure inside exchange-traded securities structures.