BlackRock Meets with SEC to Discuss Bitcoin ETF Approval
Bloomberg Analyst James Seyffart has confirmed that BlackRock, the asset manager, recently had a meeting with the Securities Exchange and Commission (SEC). This meeting took place on the same day that Grayscale also met with the SEC. The purpose of BlackRock’s meeting was to discuss NASDAQ’s proposed rule change to list and trade shares of the iShares Bitcoin Trust, which is BlackRock’s proposed Spot Bitcoin ETF.
The Focus on In-Kind and Cash Creation Models
It appears that the SEC prefers a ‘cash creates’ model for these ETFs rather than an in-kind model. Eric Balchunas, another Bloomberg Analyst, suggests that the SEC is advising exchanges to adopt cash creation for these funds. However, BlackRock seems to prefer the in-kind model for their Spot Bitcoin ETF. They believe it is the cleanest structure for both them and end investors. But they may need to reconsider their position if they want to avoid potential delays.
Advantages and Disadvantages of In-Kind and Cash Creation Models
Balchunas explains that a cash creation model puts the responsibility on issuers to transact in Bitcoin, preventing broker-dealers from dealing with unregistered subsidiaries or third-party firms. On the other hand, an in-kind model may have advantages in terms of spread and taxation. Currently, only 2-3 filers plan to use a cash creation model, but they may make amendments based on the SEC’s position.
SEC’s Openness to Approving Bitcoin ETFs
The SEC seems more open to approving these funds but wants filers to ensure regulatory compliance before proceeding with any approval.
Hot Take: Approving Bitcoin ETFs Requires Consideration of Model Preferences
The recent meeting between BlackRock and the SEC highlights the ongoing discussion about the preferred model for Bitcoin ETFs. While BlackRock prefers an in-kind model, the SEC seems to lean towards a cash creation model. Both models have their advantages and disadvantages, and issuers need to carefully consider which one aligns with regulatory compliance. The SEC’s openness to approving Bitcoin ETFs shows positive progress for the crypto industry, but it also emphasizes the importance of adhering to regulatory standards.
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