BlackRock’s Bitcoin ETF Adaptation
black stone, The latest filing includes a cash-out model for the Bitcoin ETF, responding to SEC demands amid ongoing discussions about creating ETF shares.
In an amended Form S-1 filed on Monday, BlackRock disclosed a significant change in its approach to how shares of the proposed Bitcoin fund will reflect the digital asset’s price movements.
Evolution of the ETF redemption model
The asset manager’s shift to cash-generating systems follows similar adjustments by rival ETF applicants such as ARK Invest and 21Shares. These applications also reflect a shift toward cash-based creation and a move away from the preferred “in-kind” redemptions associated with Bitcoin. .
Also read: Ethereum ETF Approval Delayed: SEC Decision Postponed to Late May 2024
SEC Position and Industry Dynamics
BlackRock, Grayscale and other applicants have engaged in discussions with SEC officials to explore the best approach for repurchasing ETF shares. While the spot model is considered more efficient for asset managers, the SEC has expressed concerns about the potential risks associated with broker-dealers managing Bitcoin-based redemptions.
Bitcoin ETF Landscape and Expected Approval
Despite BlackRock’s filing changes, the cash-out model still requires Coinbase, the fund’s custodian, to hold actual BTC, which offers an improvement over existing Bitcoin futures ETFs.
The regulatory backlash against spot ETFs appears to be evolving following the recent Grayscale court case, with several ETF approvals expected in the coming months. However, analysts’ insights into pending filings such as WisdomTree’s Bitcoin ETF proposal suggest lingering doubts about whether the initial wave of approvals will include the Grayscale Bitcoin Trust (GBTC).