Blackrock Embraces Cash Creation Model for Bitcoin ETF
The world’s largest asset manager, Blackrock, has accepted the U.S. Securities and Exchange Commission (SEC)’s preference for the cash creation model for its spot bitcoin exchange-traded fund (ETF), moving away from the in-kind model.
In an amendment to its ETF filing, Blackrock stated that its Ishares Bitcoin Trust will issue shares in baskets of 40,000 or multiples thereof, which can be redeemed for cash proceeds by the trust. The amendment also mentioned the possibility of future transactions taking place in exchange for bitcoin, pending in-kind regulatory approval.
Blackrock also changed the ticker for its bitcoin ETF from IBTC to IBIT in its recent amendment. The company had previously met with the SEC to discuss the use of the cash creation model versus the in-kind model, with Blackrock initially favoring the latter.
Analysis and Twitter Reactions
An ETF analyst commented on Twitter that Blackrock’s decision to go cash-only signaled the end of the debate over the in-kind model. He considered it a positive sign that the SEC was aligning its requirements before the holidays.
Hot Take: Blackrock’s Move Reflects Regulatory Concessions
Blackrock’s adoption of the cash creation model for its bitcoin ETF demonstrates its willingness to accommodate the SEC’s preferences. By accepting the cash creation model, Blackrock aims to address the regulatory concerns surrounding the in-kind model. The decision may expedite the approval process for the ETF and bring greater regulatory clarity to the cryptocurrency market. It remains to be seen how this development will impact the overall adoption of bitcoin ETFs and their performance in the market.
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