The quest for a spot Bitcoin ETF in the U.S. is heating up. To understand the outlook, it’s key to understand the process that filings go through before they can be approved.

Two Types of ETFs

Exchange-traded funds in the U.S. follow different paths to approval depending on the type of ETF they are. Most ETFs are registered under the Investment Company Act of 1940. These “1940 Act” ETFs have a fairly simple pathway to approval: Issuers file paperwork and the filing automatically goes effective after 75 days, unless the SEC issues a stop order.

Spot bitcoin ETFs, however—like all spot commodity ETFs—are filed under the Securities Act of 1933. The key feature of the “1933 Act” structure is that a filing does not automatically go effective after 75 days. Instead, the SEC must affirmatively approve a 1933 Act filing before it can launch.

How Does the 1933 Act Review Process Work?

The 1933 Act review process follows a specific timeline, which begins when the exchange where the ETF will trade (such as the New York Stock Exchange) files what’s called a “19b-4 filing” with the SEC. The 19b-4 effectively asks the SEC for permission to list and trade the ETF.

Up to 15 days after the filing is submitted to the SEC, the filing is then published to the Federal Register. From that moment, the SEC has up to 240 days to approve or reject it (although it can come to a decision sooner than 240 days).

The 240-day process is split into four stages: 

• A 45-day window initial review window, which can be extended to…
• A second 45-day initial review window, which can be extended to…
• A 90-day period called “Order Instituting Proceedings,” which can be extended to…
• A final 60-day period, after which the SEC must publish its decision.

Note: Just because a filing progresses from one stage to another does not necessarily imply that it has an increased likelihood of approval. The SEC has historically extended most review deadlines to the full 240 days.