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Outline:
The U.S. Securities and Exchange Commission (SEC) is laying the groundwork for a potentially groundbreaking event as it focuses on the imminent prospect of approving a "spot" bitcoin exchange-traded fund (ETF) within the next year.
The SEC recently engaged in separate teleconferences with individuals aspiring to establish bitcoin ETFs. While these discussions delved into application procedures, they also emphasized the organizational structure these ETFs should adopt.
š„BREAKING: BlackRock had its 6th official meeting with the SEC about its spot #Bitcoin ETF yesterday! pic.twitter.com/QW25u0dW5X— Crypto Rover (@rovercrc) December 22, 2023
Notably, the SEC clarified its stance, indicating that only cash payments would be acceptable, explicitly excluding Bitcoin or any "in-kind" payment methods. This cash-only approach extends to both ETF acquisitions and redemptions, omitting any references to in-kind transactions, as emphasized by SEC personnel.
Notable contenders in the quest for SEC approval are financial behemoth BlackRock and cryptocurrency asset manager Grayscale. Despite facing opposition due to the SEC's insistence on a cash-only framework, these entities argue that in-kind transactions would enhance efficiency and foster a more robust trading market.
The SEC's outreach included prominent players such as BlackRock, Valkyrie, Grayscale, Ark 21Shares, Hashdex, Bitwise, Nasdaq, and CBOE. The SEC's silence following these communications has triggered speculation within the industry that the government body may expedite the approval process, possibly before the year concludes. Notably, the SEC has mandated that issuers submit updated reports by December 29, sparking anticipation of a potential approval before the January 10 deadline.
BlackRock Updates its Proposal
BlackRock, in an effort to align its proposed bitcoin spot ETF with regulatory standards, incorporated the capability to exchange shares for cash, marking compliance with prescribed requirements. According to a December 18th filing, the renowned asset management giant opted to set aside its preferred in-kind redemption approach temporarily. Instead, he embraced the alternative of enabling investors to generate and redeem cash, as explicitly outlined in an updated S-1 filing.
Initially, BlackRock had filed documentation for the ETF to facilitate in-kind redemptions, allowing investors to swap their fund shares for the bitcoin held by the ETF. The act of returning shares to investors mandates the corporation to convert the cryptocurrency asset into cash, adhering to the SEC-sanctioned cash model. Regrettably, BlackRock has not relinquished hope that in-kind redemptions may be reintroduced in the future.
Numerous experts persist in foreseeing the green light for Exchange-Traded Fund (ETF) approvals in the United States during the initial months of 2024. Bloomberg's ETF authorities, James Seyffart and Eric Balchunas, an imminent approval for a spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC) is anticipated in January 2024, notwithstanding a flurry of eleventh-hour adjustments being made by aspirants to their applications.
On December 21, Seyffart took to X (formerly known as Twitter) to deliberate the most recent update on the spot Bitcoin ETF from December 18, initiated by BlackRock. This amendment sanctioned the utilization of the SEC's cash redemption method as opposed to non-monetary transfers like Bitcoin through in-kind redemptions.
Seyffart highlighted the substitution of the term "prime execution agent" for "prime broker and the trade credit lender" in BlackRock's latest iShares Bitcoin Trust ETF S-1 registration statement. This shift might elicit discomfort from the SEC. Speculating on potential repercussions, Seyffart questioned which entities would revise their documentation in response.
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Brenda has been a news writer since 2019 with a deep background in crypto. Brenda commits to producing excellent, well-optimized content to ensure consumer satisfaction.