First deadline window looms for SEC to approve Bitcoin ETFs: Law Decoded

Regulation

The United States Securities and Exchange Commission (SEC) could approve all 12 pending spot Bitcoin exchange-traded fund (ETF) applications by Nov. 17. Beginning on Nov. 9, the SEC reportedly has a “window” to approve all 12 spot Bitcoin ETF filings, including Grayscale Investments conversion of its Grayscale Bitcoin Trust product.

However, even if the SEC approves spot Bitcoin (BTC) ETFs by Nov. 17, it could be more than a month before the products launch. The expected delay in launch following SEC approval would be due to the two-step process of launching an ETF. For an issuer to start a Bitcoin ETF, it must get approval from the SEC’s Trading and Markets division on its 19b-4 filing and its Corporate Finance division on the S-1 filing or prospectus. Of the 12 Bitcoin ETF applications, nine issuers have submitted revised prospectuses showing they have communicated with the Corporate Finance division.

Meanwhile, Nasdaq filed the 19b-4 form with the securities regulator on behalf of the $9 trillion asset management firm BlackRock for a proposed ETF, the iShares Ethereum Trust. The move signals BlackRock’s intention to expand beyond Bitcoin with its crypto ETF aspirations. The fund has already registered the corporate entity iShares Ethereum Trust in Delaware. At least five other firms are seeking SEC approval for a spot Ether (ETH) ETF: VanEck, ARK 21Shares, Invesco, Grayscale, and Hashdex.

CLARITY Act may forbid U.S. officials from engaging with Tether’s parent company

U.S. Representatives Zach Nunn and Abigail Spanberger have jointly introduced the Creating Legal Accountability for Rogue Innovators and Technology Act of 2023 — or the CLARITY Act of 2023. The legislation aims to prohibit federal government officials from conducting business with Chinese blockchain companies. The act would ban government employees from using the underlying networks of Chinese blockchain or cryptocurrency trading platforms. Furthermore, it would explicitly forbid U.S. government officials from engaging in transactions with iFinex, the parent company of USDT issuer Tether.

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Forty-seven countries pledge to start exchanging crypto tax data by 2027

Forty-seven national governments have issued a joint pledge to “swiftly transpose” the Crypto-Asset Reporting Framework (CARF) — a new international standard on automatic exchange of information between tax authorities — into their domestic law systems. Developed from an April 2021 mandate from the G20, the CARF framework requires reporting on the type of cryptocurrency and digital asset transaction, whether through an intermediary or a service provider. The statement’s authors intend to activate exchange agreements for information exchanges to commence by 2027.

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The European Banking Authority proposes its guidelines for stablecoin issuers

The European Banking Authority (EBA) — the European Union’s banking watchdog — has proposed new guidelines for stablecoin issuers to set minimum capital and liquidity requirements. Under the proposed liquidity guidelines, stablecoin issuers must offer any stablecoin backed by a currency that is fully redeemable at par to investors. The official proposal by the EBA noted that the stablecoin liquidity guidelines will act as a liquidity stress test for stablecoin issuers. The EBA believes the stress test will highlight any shortcomings and lack of liquidity for the stablecoin. This can help the authority approve only fully-backed stablecoins with enough liquidity buffer. 

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