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- 1 BlackRock, the world’s largest asset manager, has filed an updated Bitcoin exchange-traded fund (ETF).
- 2 The updated EPS is filed with the chance of securing a first-of-its-kind spot in Bitcoin ETF approval in the US.
- 3 The update includes a spot bitcoin exchange-traded fund to allow cash redemptions.
On December 18, 2023, the BLK (BlackRock) submitted an updated spot bitcoin (BTC) exchange-traded fund (ETF) proposal to please regulators, likely increasing the chances of getting first-of-its-kind approval in the US.
Changes in the Updated Proposal
As per the updated proposal, Blackrock’s BTC ETF will add features for cash creation and redemption mechanisms, a model that the Securities and Exchange Commission (SEC) favors.
All the early applicants, including Grayscale, Franklin Templeton, and Fidelity, have already submitted the updated version of their BTC ETF filing for approval from the SEC, and BlackRock is the latest to update its filing.
BlackRock did this amid the speculation of the SEC that it could approve a number of spot bitcoin ETFs at the beginning of 2024, that is, in the first half of January. Besides, it is also expected that the SEC will approve all the BTC ETFs at the same time.
Early Proposal of BlackRock
BlackRock initially applied for its iShares Blockchain and Tech ETF in November, proposing an in-kind redemption model.
However, while the SEC was scrutinizing the proposal, it raised concerns about investor safety and market manipulation. ETFs generally feature one of the two types of redemption and creation mechanisms, either in-kind or cash.
BlackRock had used an in-kind model in its initial offering and also demonstrated how it would work to SEC officials in a meeting. The company claimed that an in-kind model has several benefits, including tax efficiency.
The SEC had advised firms that had applied for a Bitcoin ETF to switch to cash creations instead of in-kind redemption mechanisms.
Under the in-kind redemption structure, firms are allowed to redeem shares for Bitcoin, which their ETFs hold. As per many firms, this in-kind redemption structure is more appealing to investors.
In contrast, the Securities and Exchange Commission considers cash redemptions as a safer and more accessible redemption option, as they replace the shares with their equivalent cash value.
BlackRock’s Expectation
The updated filing indicates that BlackRock expects to facilitate in-kind creations at some point, depending on the Security and Exchange Commission’s approval.
The decision of BlackRock to agree with the views of the SEC and prioritize cash creations in its latest filing is considered a positive sign. It will help build anticipation around the approval.
After BlackRock filed updated spot BTC ETF mechanisms, Wisdom Tree has also submitted an updated filing.
The move by BlackRock also indicates that there is a shift in the strategies of asset managers.
Moreover, the positive development in the Bitcoin ETF applications has increased the possibility of the SEC’s approval of Bitcoin ETF earlier. This positive development has also brought a positive change for the Bitcoin prices in the crypto markets.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
