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Authored by Helen Partz via CoinTelegraph.com,

The SEC wants to minimize the number of intermediaries in spot Bitcoin ETFs to make them a “little more controllable,” Bloomberg ETF analyst Eric Balchunas said.

As the cryptocurrency community awaits the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the United States in January, today marks a significant deadline.

The U.S. Securities and Exchange Commission (SEC) said last week that spot Bitcoin ETF applicants must file final S-1 amendments by Dec. 29.

The regulator also required them to sign an agreement with an authorized participant (AP) and sort out the cash-create redemption model it favors.

The deadline means that today, the community will likely find out which spot Bitcoin ETF filers out of 14 applicants could be in the first wave of potential spot BTC ETF approvals, which is largely expected in early January.

According to Bloomberg’s senior ETF analyst Eric Balchunas, many ETF applicants have updated their filings with the cash-create redemption model.

As of Dec. 22, seven applicants had their filings fixed to cash-create, while the other seven included both cash-create and in-kind models in their registration statements.

Spot Bitcoin ETF filings’ statuses as of Dec. 22, 2023. Source: X (formerly Twitter)

Most existing ETFs involve in-kind creation, meaning that when the intermediaries want to make new ETF shares, they give firms like BlackRock funds using actual assets like Bitcoin.

The reason the SEC wants the cash model for spot Bitcoin ETFs is that they want to minimize the number of intermediaries that have access to the actual Bitcoin in the redemption and offering process, the ETF analyst believes.

The SEC wanted to “close the loop a little more,” Balchunas said, mentioning that he had also heard of regulators being worried about money laundering. He stated:

In addition to the cash-create preference, the ETF applicants must have a determined AP by today.

In their most recent spot Bitcoin ETF amendment filed on Dec. 28, ARK and 21Shares did not specify the name of an AP.

“AP mentioned a ton but not named. Assuming that will probably come in the very final effective update just prior to launch. But we still don't know if they have signed an agreement,” Balchunas wrote on X.