Major Applicants for Bitcoin ETF Adjust Filings to Comply with Cash Redemption Model
BlackRock and ARK Invest, two major applicants for a Bitcoin exchange-traded fund (ETF) in the US, have made amendments to their registration statements with the Securities and Exchange Commission (SEC). The amendments relate to the cash creation and redemption model for the proposed ETFs. Both BlackRock and ARK have agreed to accept the cash redemption system instead of in-kind redemptions. ARK’s registration statement hinted at potential in-kind transactions but clarified that only cash creations and redemptions would be allowed. BlackRock also stated that in-kind transactions may take place, subject to regulatory approval.
SEC’s “Cash-Only” Requirement
The SEC’s requirement for cash-only transactions means that authorized participants can only obtain more shares of the ETF by bringing cash to the table. In-kind transfers are not permitted for spot Bitcoin ETFs. This requirement aims to ensure transparency regarding the source of underlying Bitcoins held by the ETF. It allows investors to know where the Bitcoins came from, as they are purchased from reputable exchanges.
WisdomTree Keeps In-Kind Option
While BlackRock and ARK have accepted the cash redemption model, WisdomTree has filed an S-1 amendment that maintains the option for in-kind creation and redemption of its proposed spot Bitcoin ETF. Authorized participants may surrender baskets in exchange for Bitcoin or cash, providing flexibility in the creation and redemption process.
Hot Take: Bitcoin ETF Applicants Adapt to SEC’s Requirements
The recent amendments made by major Bitcoin ETF applicants reflect their willingness to comply with the SEC’s demands. The move toward a cash redemption model ensures transparency and accountability in acquiring underlying Bitcoins. While some applicants initially explored alternative methods such as in-kind transactions, the SEC’s stance indicates a preference for cash-only transactions. This development suggests that the debate is over, potentially paving the way for ETF approvals in January. The industry continues to adapt to regulatory requirements as it seeks broader access to Bitcoin investments.
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