SEC Implements New Regulatory Standard for Bitcoin ETF Applicants
Recent reports have revealed that the United States Securities and Exchange Commission (SEC) has implemented a “new regulatory standard” for all Bitcoin Spot Exchange-Traded Fund (ETF) applicants while awaiting approval from the regulatory body.
Cash Redemption Model For Bitcoin ETF Applicants
Top Bloomberg Analyst James Seyffart took to X (formerly Twitter) to share the latest update by the regulatory watchdog. According to him, every Bitcoin Spot ETF applicant will have to bend their knees to this new model.
The SEC’s latest “Cash Redemption Model” came amid the spot Bitcoin ETF issuers ironing their filings with the US regulator. It seems that the SEC is unwavering in its demand, rather than approve the different model that other issuers have suggested.
In-Kind Redemption Model Adopted by Blackrock
Blackrock recently adjusted its Spot Bitcoin Exchange-Traded Fund (ETF) application introducing an in-kind redemption model called “Prepay.” This is to tackle the restrictions that financial firms are facing in order to hold cryptocurrencies.
The adjustment aims to make it easier for Wall Street Banks to participate in the fund. With this modification, authorized participants (APs) would be allowed to issue new fund shares using cash instead of just Bitcoin. The funds that the APs use for this procedure can subsequently be converted into Bitcoin through an intermediary and kept in storage by the ETF’s custody provider.
Hot Take: SEC Implements New Cash Redemption Model for Bitcoin ETFs
The SEC has recently implemented a new regulatory standard for all Bitcoin Spot Exchange-Traded Fund (ETF) applicants. Known as the “Cash Redemption Model,” this requirement has been introduced while awaiting approval from the SEC. Under this model, authorized participants can deposit funds in the ETF equal to the net asset value of the creation units to be created. The fund then purchases Bitcoin using this money. Invesco is among the companies that have adopted this model, while Blackrock has introduced an in-kind redemption model called “Prepay” for its Bitcoin ETF application. These changes aim to make it easier for financial firms and Wall Street Banks to participate in Bitcoin ETFs.
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