KEY POINTS
- The SEC reportedly instructed spot Bitcoin ETF issuers last month to amend their proposals and use cash creations
- Invesco, like with Bitwise, amended its spot BTC ETF proposal to use cash creations
- BlackRock has already met with some SEC officials to push for the in-kind redemption model
American investment management company Invesco has submitted its updated S-1 form, and an analyst said it may contain a clue about what the U.S. Securities and Exchange Commission (SEC) wants for the first batch of approved spot Bitcoin exchange-traded fund (ETF).
Invesco and Galaxy filed the third amendment to their Invesco Galaxy spot Bitcoin ETF S-1 form with the SEC on Wednesday. This comes as issuers continue to iron out details of their filings with the major Wall Street regulator and as the final deadline for the SEC to announce its decision on the crypto investment vehicle nears.
In its recent filing, the spot Bitcoin ETF registration underlined that it will only use cash creations in response to the SEC's instruction to use the cash redemption model instead of the in-kind creation and redemption model proposed by other applicants.
Interestingly, Bloomberg Intelligence senior ETF analyst Eric Balchunas thinks Invesco's latest amendment may contain a major clue as to what kind of spot Bitcoin ETF prospectus the SEC will approve when the deadline for it to make a decision finally comes.
"Invesco is committing to cash creates only, as per their just-updated S-1. Pretty big clue that SEC is dug in on only letting cash create ETFs out in first run (which is what we hearing back channel as well). Still, many were waiting to see if BlackRock could sway SEC on in-kind," he wrote in a post on X.
Invesco is committing to cash creates only, as per their just-updated S-1. Pretty big clue that SEC is dug in on only letting cash create ETFs out in first run (which is what we hearing back channel as well). Still, many were waiting to see if BlackRock could sway SEC on in-kind https://t.co/l4DIu9G2Wh
— Eric Balchunas (@EricBalchunas) December 13, 2023
However, finance lawyer Scott Johnson thinks Invesco underlined in its updated S-1 form that it has become the latest firm to bend its knee to what the SEC wants. James Seyffart, another Bloomberg Intelligence ETF analyst, agreed with this when he said, "I think everyone is gonna have to bend the knee to cash creates and redeems."
The issue of using cash or in-kind redemption of spot Bitcoin ETF proposals was raised last month by Balchunas, who claimed that the SEC instructed hopeful issuers to amend their filings and use cash instead of in-kind creations. And while some issuers like BlackRock pushed for in-kind creations, firms like Invesco and Bitwise have already given in to the SEC's demand.
"@BitwiseInvest has already been set for ONLY cash creates/redeems since December 4th. Though for months they had In-Kind or Cash in their documents," Seyffart said as he shared the amended spot Bitcoin ETF prospectus of Bitwise saying it will use cash creations in its spot Bitcoin ETF.
Of note: @BitwiseInvest has already been set for ONLY cash creates/redeems since December 4th. Though for months they had In-Kind or Cash in their documents before this: pic.twitter.com/2xzy9NbbZp
— James Seyffart (@JSeyff) December 14, 2023
BlackRock has already met with some officials of the SEC to discuss its in-kind creation model and shared with the agency a revised version of its in-kind model proposal to address its concerns.
The industry is now waiting to see if the SEC will budge to Blackrock's in-kind model proposal or if it will stand firmly with its cash creation recommendation.
