KEY POINTS
- Blackrock first applied for its iShares Blockchain and Tech ETF in November, proposing the use of an in-kind redemption model
- SEC was critical of the proposal, raising concerns about investor safety and market manipulation
- Bitcoin was trading in the green zone at $42,983.88 in the early hours of Tuesday
In what seems like a strategic move to appease the U.S. Securities and Exchange Commission and boost its odds of getting approval, New York-based investment giant BlackRock has revised its Bitcoin exchange-traded fund (ETF) application by including a cash creation and redemption model.
After several attempts to push for an in-kind creation and redemption model on its spot Bitcoin ETF application, BlackRock finally bowed to SEC pressure and submitted a revised S-1 registration form Monday, agreeing to incorporate cash creation and redemption mechanisms into its fund.
The topic had been the key focus of a series of meetings held between BlackRock and SEC officials over the past weeks.
"The Trust issues and redeems Baskets on a continuous basis," BlackRock's latest S-1 filing read. "These transactions will take place in exchange for cash. Subject to the in-kind regulatory approval, these transactions may also take place in exchange for bitcoin."
Blackrock first applied for its iShares Blockchain and Tech ETF in November, proposing the use of an in-kind redemption model. However, the major Wall Street regulator was critical of the proposal, raising concerns about investor safety and market manipulation.
According to Bloomberg Intelligence senior ETF analyst Eric Balchunas, BlackRock's latest move is a good sign and it puts an end to the debate on the type of creation and redemption model to be used on a spot Bitcoin ETF. He said the decision could be about getting things in order before the holidays.
"BlackRock has gone cash only. That's basically a wrap. Debate over. In-kind will have to wait. It's all about getting ducks in a row bf [before] holidays. Good sign," Balchunas wrote on X.
The analyst added that the New York-based investment giant had two choices: either give in to the SEC's preferred model or wait until the regulator approves in-kind redemption.
BlackRock has gone cash only. That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in row bf holidays. Good sign. https://t.co/vgocs1aIwS
— Eric Balchunas (@EricBalchunas) December 19, 2023
The investment firm, founded by Larry Fink in 1988, is the latest applicant to bend the knee to the SEC's demand for cash redemptions.
Bitcoin, the world's largest crypto asset by market capitalization, was trading in the green zone at $42,983.88 as of 3:18 a.m. ET on Tuesday. The latest price action represents a 4.31% spike in its value in the past 24 hours and a 2.77% gain over the last seven days.
Data from CoinMarketCap shows that Bitcoin's current circulating supply stands at 19.57 million BTC and its market cap is at $840.75 billion.
