BlackRock Updates Proposed Spot Bitcoin ETF to Allow Cash Redemptions
BlackRock, a global leader in investment management, has revised its proposed spot Bitcoin exchange-traded fund (ETF) to allow cash redemptions. This strategic move could increase the chances of approval from the US Securities and Exchange Commission (SEC).
The updated filing for the iShares Bitcoin Trust ETF states that the Trust will issue and redeem baskets in exchange for cash. This flexibility may also extend to Bitcoin exchanges in the future.
Cash Redemptions To Set New Course For Spot Bitcoin ETF
This update is significant in terms of regulatory expectations. Eric Balchunas, a Bloomberg analyst, refers to it as a “wrap,” indicating BlackRock’s commitment to aligning with regulations and potentially getting approval from the SEC.
With this shift to cash redemptions, BlackRock will accept cash to create new shares and vice versa. This diverges from the typical ETF model where assets like Bitcoin can be directly exchanged for shares.
BlackRock has gone cash only. That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in row bf holidays. Good sign.
— Eric Balchunas (@EricBalchunas) December 19, 2023
Vance Herwood, an investor and consultant, explains that the “cash only” approach means that ETF shares will be exchanged solely for cash instead of in-kind transfers like Bitcoin.
This method could streamline the process and ensure that the ETF acquires its Bitcoin from reputable sources, aligning with regulatory standards. It could also simplify the redemption process between authorized participants (APs) and the issuer.
BlackRock And Others Step Up Engagement With SEC for BTC Spot ETF Green Light
Alongside the cash redemption update, BlackRock has been actively engaging with the US SEC to seek approval for spot Bitcoin ETFs. This includes multiple meetings with the SEC in recent weeks.
Other key players in the industry, such as Fidelity, Grayscale, and Franklin, have also had similar engagements with the SEC. These discussions involve critical divisions within the SEC that will ultimately decide the fate of spot Bitcoin ETFs.
The involvement of these divisions highlights the thorough review process undertaken by the SEC and indicates progress towards approving these spot ETF products.
Hot Take: BlackRock’s Updated Spot Bitcoin ETF Filing Strengthens Regulatory Alignment
BlackRock’s decision to allow cash redemptions in its proposed spot Bitcoin ETF filing demonstrates a commitment to meeting regulatory expectations. This strategic move could increase the likelihood of gaining approval from the US SEC.
The shift to cash redemptions signifies a departure from traditional ETF models and streamlines the process of acquiring Bitcoin from reputable sources. By engaging in ongoing discussions with the SEC, BlackRock is actively working towards securing approval for spot Bitcoin ETFs.
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