Here are 3 indicators that the SEC will approve spot bitcoin ETFs.

The US Securities and Exchange Commission's (SEC) approval of spot bitcoin ETFs (exchange-traded funds) is a topic of much speculation in the crypto market. According to recent developments, the financial system may be at this critical stage.

Here are three pointers to the SEC's possible green light for a spot Bitcoin ETF.

1. BlackRock's Revised Proposal Conforms to SEC Preferences.

BlackRock recently updated its Bitcoin ETF space, specifically allowing for cashbacks. This strategic shift appears to align closely with SEC preferences, increasing the chances of approval.

“The Trust will continuously issue and redeem baskets. These transactions are done in exchange for cash. Subject to regulatory approval in kind, these transactions may be executed in exchange for Bitcoin,” BlackRock said.

The SEC has set a January 15th deadline for BlackRock's spot Bitcoin ETF application. The final verdict is on March 15. This move by BlackRock could set the stage for future ETF applications, indicating its willingness to adapt to regulatory expectations.

2. In-depth discussions indicate the involvement of the SEC

Discussions between the SEC and Bitcoin ETF issuers have reportedly gone beyond surface-level talks. The financial watchdog and institutions are scrutinizing the key technical aspects of these offerings.

For example, on November 20, a team from the Trading and Markets department, including David Shillman, Tom McGowan, and Randall Roy, among others, met with several BlackRock representatives. This development shows the SEC's deeper involvement in understanding and possibly handling Bitcoin ETFs.

“The discussion concerns a proposed rule change by The NASDAQ Stock Market LLC to list and trade shares of the iShares Bitcoin Trust under NASDAQ Rule 5711(d). Blackrock is also available [a] Presentation,” the SEC memo read.

James Seifert, a research analyst at Bloomberg Intelligence, also reported that four different issuers have discussed Bitcoin ETF proposals with the SEC. BlackRock recently held its third meeting with the SEC, while Greyscale, Franklin and Fidelity each held separate meetings.

Read more: How to prepare for a Bitcoin ETF: A step-by-step approach

A federal appeals court ruling in favor of Greyscale's ETF application appears to have forced the SEC to reconsider its position. This may limit the SEC's ability to reject new filings on previously held grounds. It then hints at a more open approach to cryptocurrency-based financial products.

3. The SEC chairman acknowledges the impact of court decisions

SEC Chairman Gary Gensler's recent comments show that the agency is handling multiple Bitcoin ETF filings, between eight and twelve. Gensler highlighted the impact of recent court decisions on the SEC's decision-making process.

“We've denied many of these applications in the past, but the courts here in the District of Columbia were able to weigh in on that. And based on those court decisions, we're taking this new look,” Gensler said.

This acknowledgment signals a potential shift in the SEC's approach, perhaps making it more amenable to approving such applications. The recognition of legal precedents and the ongoing consideration of multiple filings suggests that the SEC is taking a more measured and favorable view of Bitcoin ETFs.

Read more: Why Bitcoin has a 700-day bullish move ahead of the next high.

In conclusion, the combination of BlackRock's adaptive proposal, the deep engagement between the SEC and ETF issuers, and the SEC Chairman's collective recognition of the impact of legislative decisions makes it highly likely that the SEC will approve the Bitcoin ETF space. Such approval would be a major milestone for the cryptocurrency market, signaling the increasing integration of digital assets into mainstream financial systems.