25 February, 2024

SEC Delays on Franklin Templeton & Hashdex: Bullish Approvals on Spot Bitcoin ETFs

3 months ago

29 Nov, 2023

  • SEC to delay the proposed spot Bitcoin ETF application by Franklin Templeton and Hashdex.
  • Written comment proposals on both applicant’s forms 19b-4 are required for SEC to provide approval.
  • James Seyffart says that he was surprised by the decision made by the SEC to delay Franklin and Hashdex’s application.

On November 28, 2023, the Securities and Exchange Commission (SEC) delayed its decision regarding the spot Bitcoin exchange-traded funds (ETFs) applications by Franklin Templeton and Hashdex. The deadline to decide the approval of the last two of the 12 ETF applicants has been extended till January 1. James Seyffart, a Bloomberg EFT analyst, assumes that the SEC is planning to approve the spot bitcoin ETF between Jan 2 – Jan 10, as reported by Titan of Crypto, an investor, trader, and technical analyst.

The SEC requested comments on Franklin Templeton and Hashdex forms 19b-4, which is necessary if the Bitcoin ETFs want to be listed and traded. Form 19b-4 is used by self-regulatory organizations (SROs), which must file their bylaws, rules, and regulations with the SEC for public bookkeeping. The comments and rebuttal period usually lasts for 35 days from their publication in the Federal Register. 

Analyst Seyffart posted on X about the SEC’s decision regarding Franklin’s application, stating

 Update: Wow. SEC went super early on Franklin. They weren’t due for another decision until Jan 1. Notably, Franklin is the only issuer who didn’t submit an updated S-1 yet. Wonder if that has any impact here.

James also commented that the delay on Hashdex confirms his suspicion that this is likely a move to line every applicant up for potential approval by January 10, 2024. He continued that the approvals may only be for the 19b-4 and added he wasn’t sure that the SEC would approve the S-1s.

Scott Johnson, a financial lawyer at Davis Polk, gave his insights regarding the SEC’s early decision.

2nd deadline was 1/1 for Hashdex and Franklin. It requires a 35 day comment period during which the SEC could not approve them. Global X is currently in a comment period til EOD Dec 29. That’s the Friday of a holiday weekend and SEC will want to cushion at least a few days to review comments received.

Johnson further commented that assuming the SEC wants to approve all 12 applications, it only makes sense that the SEC had to start the clock early on Franklin and Hashdex for their 35-day deadline so that it would be around January 2, 2024. By doing this, the SEC would have a week to issue simultaneous approvals before the deadline of Jan 10, 2024, for Ark Invest and 21 Shares.

Seyffart commented that Franklin submitted an updated prospectus for their spot Bitcoin ETF. This move further reinforced the narrative that the SEC is getting ready to align all the 12 spot Bitcoin ETFs and approve them. This is likely done in order to maintain fairness in the race for the first spot Bitcoin ETF.