Bitcoin ETF

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<p class="is-style-lead">BlackRock, the world’s largest asset manager, has recently updated its application for a spot Bitcoin Exchange-Traded Fund (ETF) in a bid to address the U.S. Securities and Exchange Commission’s (SEC) concerns.</p>
<p>The <a href="https://www.sec.gov/comments/sr-nasdaq-2023-016/srnasdaq2023016-303319-781202.pdf" target="_blank" rel="noopener noreferrer nofollow">revisions</a>, detailed in the meeting minutes from a Nov. 28, 2023, discussion with the SEC’s Division of Trading and Markets, focus on mitigating issues related to market manipulation and broker-dealer registrations.</p>
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   <p lang="en" dir="ltr">Looks like BlackRock met with the SEC's Trading &amp; Markets division again yesterday and gave presented them with a "revised" in-kind model design based on Staff's comments at their 11/20 meeting.. h/t <a href="https://twitter.com/btcNLNico?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">@btcNLNico</a> here's full doc: <a href="https://t.co/sgOpY5D1jz" target="_blank" rel="noopener noreferrer nofollow">https://t.co/sgOpY5D1jz</a> <a href="https://t.co/863pWOX6w0" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/863pWOX6w0</a></p>— Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1729921877328503083?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">November 29, 2023</a>
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<h2 class="wp-block-heading" id="blackrock-s-updated-redemption-model">BlackRock’s updated redemption model</h2>
<p>In its revised proposal, BlackRock introduces a “prepaid model” within the existing in-kind redemption framework. This model requires the offshore market maker to prepay cash to the registered broker-dealer entity before the delivery of ETF shares in the redemption process.</p>
<p>This adjustment is designed to reduce the financial risks for the broker-dealer by separating it from the complexities of transferring Bitcoin to the market maker.</p>
<p>You might also like: <a href="https://crypto.news/bloomberg-blackrock-and-grayscale-meeting-with-sec-about-bitcoin-etf-issuance/" rel="noopener noreferrer nofollow"> Bloomberg: BlackRock and Grayscale meeting with SEC about Bitcoin ETF issuance </a></p>
<p>BlackRock maintains that the in-kind structure, even with these modifications, offers several advantages over a cash redemption method. These include lower transaction costs, streamlined operations, and a reduced risk of manipulation.</p>
<p>The asset manager contends that resolving issues with the balance sheet and broker-dealer registrations by modifying the timing and custody transfer processes could facilitate the Bitcoin ETF application’s compliance with regulatory standards and simultaneously improve incentives for shareholders.</p>
<p>Whether the updates provide sufficient guardrails to offset SEC unease regarding spot Bitcoin exposure for retail investors through an ETF remains unclear.</p>
<h2 class="wp-block-heading" id="race-for-regulatory-green-light">Race for regulatory green light</h2>
<p>The move to establish a spot Bitcoin ETF has gained traction recently, with financial giants like <a href="https://crypto.news/sec-accepts-bitcoin-etf-applications-from-blackrock-fidelity-galaxy-digital/" rel="noopener noreferrer nofollow">BlackRock and Fidelity</a> Investments submitting applications to the SEC.</p>
<p>However, the path to approval is fraught with challenges. The SEC has historically been hesitant to approve spot Bitcoin ETFs, citing worries over market manipulation and insufficient surveillance measures.</p>
<p><a href="https://crypto.news/sec-finds-spot-bitcoin-etf-applications-lacking-in-details/" rel="noopener noreferrer nofollow">Recent feedback</a> from the SEC on the latest applications has reiterated these concerns, particularly the lack of clarity on specific spot exchanges for surveillance-sharing agreements.</p>
<p>On Nov. 17, rumors <a href="https://twitter.com/EricBalchunas/status/1725559994995573086" target="_blank" rel="noopener noreferrer nofollow">circulated </a>on social media that suggested the SEC might have directed applicants to adopt cash-creation methods rather than transferring Bitcoin in-kind.</p>
<p>This unconfirmed shift could significantly change the responsibilities of issuers, requiring them to manage Bitcoin transactions more discreetly. If true, this new approach could enable broker-dealers to sidestep direct involvement in crypto transactions that fall beyond existing regulatory frameworks.</p>
<p>Read more: <a href="https://crypto.news/analyst-points-to-imminent-signs-of-spot-bitcoin-etf-approval/" rel="noopener noreferrer nofollow"> Analyst points to imminent signs of spot Bitcoin ETF approval </a></p>

BlackRock modifies proposed spot Bitcoin ETF to meet SEC requirements

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