KEY POINTS
- SEC memos revealed that the SEC had met with several spot Bitcoin ETF applicants
- The deadline to release a decision on the first batch of spot Bitcoin ETF applications is Jan. 10
- Bitcoin was trading in the red zone at $41,519.42 in the early hours of Tuesday
Wall Street giants BlackRock and Fidelity have met with the U.S. Securities and Exchange Commission to iron out technical details concerning the redemption model of their spot Bitcoin exchange-traded fund (ETF) filings.
The final deadline for the SEC to release its decision on the first batch of spot Bitcoin ETF applications is Jan. 10, but till now, it has not shared any information about the filings except for some memos, which showed that several companies met with the agency over the past weeks to discuss details on how the redemption process for spot Bitcoin ETF would work.
According to the memos, both BlackRock and Fidelity are leaning toward in-kind redemption, which is in contrast to what the regulator had instructed issuers.
Bloomberg Intelligence ETF analyst Eric Balchunas last month shared that the SEC instructed spot Bitcoin ETF applicants to amend their filings and use cash instead of in-kind creations.
The recommendation from the major Wall Street regulator was viewed by some as a move to appease brokers and could potentially turn the Bitcoin ETF landscape.
The SEC prefers Bitcoin ETFs to execute cash creations – a shift, which is not entirely surprising, as it highlights the commission's approach to handling the complexities of cryptocurrency-based exchange-traded funds.
"Cash creates makes sense IMO bc broker-dealers can't deal in Bitcoin so doing cash creates puts onus on issuers to transact in Bitcoin and keeps broker dealers from having to use unregistered subsidiaries or third-party firms to deal w (with) the btc. Less limitations for them overall," Balchunas said last month.
He also explained that cash creations will benefit the SEC, while in-kind is better for investors' interest, especially when it comes to spread and taxation.
BlackRock, after its previous meeting with the SEC, presented a revised in-kind creations and redemptions model, which suggests the agency did not budge from its position on cash creation and redemption model for spot Bitcoin ETFs.
Of the 13 spot Bitcoin ETF applicants, only two or three mentioned cash creations while the rest were planning to utilize the in-kind model, the ETF analyst revealed.
Hearing chatter SEC’s Trading & Markets engaged w/ exchanges this week on spot bitcoin ETF 19b-4s, is advising them they'd like the ETFs to do cash creates (vs in-kind), and has asked them to get in amendments in next couple wks. This isn't unexpected but good sign nonetheless.
— Eric Balchunas (@EricBalchunas) November 17, 2023
While the SEC was taking its time to announce its decision on the spot Bitcoin ETF applications, BTC, which has seen an uptrend over the past weeks, was trading in the red zone at $41,519.42 as of 2:36 a.m. ET on Tuesday, with the 24-hour trading volume up by 32.44% at $32.45 billion.
Bitcoin's price action represents a 0.88% drop in its value in the past 24 hours and a 0.8% loss over the last seven days.
Its circulating supply stands at 19.57M BTC, with its value continuously plummeting by 1.05% at a market cap of $815.7 billion, according to data from CoinmarketCap.
