Written by: Mary Liu, BitpushNews

The much-anticipated ETF approval event was a big mistake. At 4:11 p.m. Eastern Time on Tuesday, the official X account of the U.S. Securities and Exchange Commission (SEC) posted a message saying: "Today, the U.S. Securities and Exchange Commission approved the listing of Bitcoin ETFs on all registered national securities exchanges. The approved Bitcoin ETF will be subject to ongoing supervision and compliance measures to ensure continued investor protection."

The post also included a quote from SEC Chairman Gary Gensler: "Today's approval enhances market transparency and provides investors with the opportunity to efficiently gain exposure to digital assets within a regulated framework."

This surprise came unexpectedly, as many analysts had previously said that the approval might be announced tomorrow. It was later confirmed that the SEC's X account had been stolen and the post about the spot Bitcoin ETF was fake news.

The SEC said it will “work with law enforcement and government partners to investigate this matter and determine next steps related to the unauthorized access and any misconduct.”

Influenced by this news, Bitcoin plunged nearly $2,500 in the short term, falling to a low of $45,529 per coin. Within an hour, the total amount of cryptocurrency liquidation exceeded $40 million.

Cameron Winklevoss, co-founder of cryptocurrency exchange Gemini, commented: The SEC has finally shown the world what it does best: "manipulating the market and hurting American investors."

The incident also attracted the attention of US lawmakers. Tennessee Republican Senator Bill Hagerty posted on Twitter that the SEC needs to be held accountable for making "such a market-impacting mistake."

“Fraudulent announcements, such as those posted on the SEC’s social media feeds, can manipulate markets,” said Sen. Cynthia Lummis, R-Wyo. “We need transparency about what’s going on.”

Waiting for the final decision tomorrow

Crypto industry insiders believe that the launch of the first spot Bitcoin ETF in the United States is a done deal. But approval is still not 100% guaranteed, especially because prejudice from the "wild world" of crypto still exists.

Bloomberg analyst Eric Balchunas revealed that sources said the SEC will officially announce the approval between 4-5 p.m. Eastern Time on January 10.

The U.S. Securities and Exchange Commission (SEC) faces a deadline on Wednesday to approve or reject at least one of 11 applications for such funds. Bitcoin prices have surged in recent weeks on expectations of regulatory approval, rising to more than $47,000, the highest level in about two years.

The approval process is a two-step process: The SEC approves the 19b-4s filings submitted by the exchanges, which outline the rule changes that will allow the new class of funds to trade, and then approves the asset management company’s registration statement to become effective before funds can begin trading.

Here are four possible scenarios for tomorrow:

All 11 applications approved at the same time

Wednesday’s deadline applies only to the first applicant: a joint venture between Cathie Wood’s ARK Investment Management and crypto asset manager 21Shares. But cryptocurrency investors and ETF analysts generally believe the SEC will approve all 11 applications at the same time to avoid a single dominant player.

First-mover advantage has been a common phenomenon in the ETF industry for years. For example, the first futures-based Bitcoin ETF—the ProShares Bitcoin Strategy ETF—had more than $1 billion in first-day volume when it launched in October 2021, far outpacing a rival product that launched a few days later. It remains the largest Bitcoin futures ETF, with $2 billion in assets under management.

If all funds are approved at once, the fierce market is expected to erupt into a brutal fee war. Some asset management companies are following the example of traditional finance in the cost battle, while others are starting to increase their marketing efforts.

The agency has previously delayed its decision on ARK’s application three times.

All 11 applications were rejected at the same time

Although unlikely at this stage, the SEC could reject all 11 spot Bitcoin ETFs. The agency has blocked the launch of such funds several times in the past, arguing that they are susceptible to fraud and market manipulation.

However, if the SEC rejects this round of applications, it will have to come up with a completely different reason. A federal appeals court ruled in August that the SEC must reconsider the application of crypto asset manager Grayscale Investments to convert its trust fund into a spot Bitcoin ETF. A circuit judge said that the SEC's rejection of Grayscale's proposal was "arbitrary and capricious" given that it had approved a Bitcoin futures ETF.

A completely split decision

The SEC can approve or deny certain applications while deferring decisions on others.

Asset managers and exchanges have been updating their filings over the past few months to incorporate feedback from SEC staff. In theory, the SEC can reject applications that don’t follow the agency’s guidelines while approving those that do.

Alternatively, if the SEC deems the latest round of tweaks to the application still insufficient, the agency could reject ARK’s application and defer its decision on the other applications until the next round of deadlines.

The SEC may also require ARK to temporarily withdraw its application and reject other applications on new grounds.

Approval of exchange filings, holding asset management company's S-1/S-3 filings

Since there has been no previous instance of the SEC approving nearly a dozen ETFs holding the same asset at once, it is uncertain whether the SEC will choose to approve an exchange’s 19b-4 filing or make an asset manager’s S-1 or S-3 filing effective first.

The SEC’s Division of Trading and Markets is responsible for reviewing 19b-4 filings made by exchanges. The SEC’s Division of Corporations and Finance is responsible for reviewing S-1 and S-3 filings made by asset management firms.

Wednesday’s deadline to review 19b-4 filings filed by Cboe on behalf of ARK and 21Shares means the agency’s two arms could be working on different timelines, leaving funds in limbo if the registration statements aren’t declared effective.

ETF analysts said they expect the two departments may coordinate efforts to ensure approvals come around the same time.