BlackRock took a significant step forward in its pursuit of a spot bitcoin exchange-traded fund (ETF) as it revealed plans for its proposed ETF, christened IBIT, in an amended S-1 filing submitted to the Securities and Exchange Commission on Monday.
The amended filing outlined crucial details, primarily focusing on the creation and redemption mechanism integral to the fund’s operations. Notably, it hinted at the potential utilization of a cash redemption model, drawing attention from analysts and indicating a shift in approach.
“The Trust issues and redeems Baskets on a continuous basis,” the filing stated, emphasizing transactions predominantly conducted in cash. However, it also left the door ajar for an “in-kind” redemption process, contingent upon regulatory approval—a move speculated to offer BlackRock enhanced portfolio management flexibility.
Bloomberg Intelligence analyst Eric Balchunas expressed a decisive stance on the development, highlighting BlackRock’s shift towards a cash-centric approach. Balchunas remarked, “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 before holidays. Good sign.”
Yet, BlackRock’s inclination towards an “in-kind” redemption model mirrors a desire for more control over managing the portfolio. However, the SEC appears inclined towards a cash-based model, potentially requiring immediate sale of stored bitcoin to facilitate investor redemptions.
The ongoing discussions between firms such as BlackRock, Fidelity, and the SEC underscore the depth of deliberations over the intricacies of the redemption process for a spot bitcoin ETF. Recent memos reveal multiple engagements between these entities, shedding light on the complexity of securing regulatory approval.
In parallel developments, Ark 21Shares and WisdomTree also submitted amended S-1 filings for their proposed spot bitcoin funds on the same day. Despite this flurry of activity, the regulator is yet to greenlight any, although the market remains optimistic about an imminent decision.
The buoyant market sentiment, amidst increased filings and ongoing discussions, hints at a growing anticipation that regulatory approval for a spot bitcoin ETF might be within closer reach than previously envisioned.
