Major Companies Modify S-1 Registration Statements for Bitcoin ETFs
BlackRock and ARK Invest have made changes to their S-1 registration statements to meet the requirements of the US Securities and Exchange Commission (SEC) for their planned spot Bitcoin exchange-traded funds (ETFs). These updates include a shift towards a cash redemption model instead of in-kind redemptions.
Cash Creation and Redemption Model Adopted
The revisions submitted on December 18, 2023, indicate a strategic decision to embrace cash creation and redemption. In the past, in-kind redemptions involved non-monetary transactions using Bitcoin directly. This adjustment aligns with SEC standards.
ARK Invest’s Change to Cash Creations and Redemptions
ARK Invest’s registration statement mentions the ARK 21Shares Bitcoin ETF and highlights the shift towards accepting cash creations and redemptions. The statement does leave room for prospective in-kind agreements, pending regulatory permission. Similarly, BlackRock acknowledges the possibility of in-kind transactions with regulatory approval.
“Cash-Only” Strategy Imposed by SEC
Authorized participants in these ETFs must now provide cash to purchase more shares due to the SEC’s insistence on a “cash-only” strategy. Unlike in-kind redemptions where investors directly swap Bitcoin for ETF shares, this approach aims to offer transparency by sourcing Bitcoin from reputable exchanges.
Industry Reaction and Possibility of Approval
The industry response has been mixed. ARK and 21Shares initially rejected the cash generation approach but ultimately complied with the SEC’s requirements. Analysts suggest this compliance may pave the way for potential approval of a Bitcoin ETF as early as January.
Trend Towards Cash Redemptions
This move reflects a larger trend where ETF issuers like BlackRock and ARK Invest are adapting to the SEC’s preference for cash redemptions. This adaptation marks a significant step in the development of Bitcoin ETFs and may signal a new phase in their evolution.
Hot Take: Major Companies Shift Towards Cash Redemption Model for Bitcoin ETFs
Major companies in the market, including BlackRock and ARK Invest, have revised their S-1 registration statements to comply with SEC requirements for spot Bitcoin ETFs. This shift towards a cash redemption model, instead of in-kind redemptions, aligns with SEC standards and aims to provide transparency in sourcing Bitcoin. While the industry response has been mixed, compliance with the SEC’s “cash-only” strategy may increase the chances of approving a Bitcoin ETF as early as January. This move reflects a broader trend among ETF issuers to adopt cash redemptions and signifies a new phase in the development of Bitcoin ETFs.
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