Blackrock (BLK) has submitted an updated proposal for an exchange-traded fund (ETF) that would track spot bitcoin (BTC) in an effort to placate regulators. This move is expected to increase the likelihood that the ETF will receive the first-ever approval in the United States.
The revised proposal calls for the Securities and Exchange Commission (SEC)-favored cash creation and redemption mechanisms for Blackrock’s ETF. As rumours circulate that the SEC may approve a number of spot bitcoin ETF applications as early as January, the largest asset manager in the world is the most recent company to revise its proposal.
Last month, Blackrock submitted its initial application for the iShares Blockchain and Tech ETF, putting forth an in-kind redemption scheme.
But after closely examining the plan, the SEC expressed worries about market manipulation and investor safety. One of two kinds of redemption and creation mechanisms is commonly found in ETFs: Cash or in-kind
Firms can redeem shares for bitcoin held by their ETFs through an in-kind redemption structure, which many firms claim is more enticing to investors. Cash redemptions replace those shares with their equivalent cash value; the SEC views this as a safer and more convenient redemption option.
Blackrock is the most recent company to consent to provide cash redemptions pending approval of in-kind redemptions. Thus far, over a dozen companies have submitted applications for exchange-traded funds (ETFs). A similar modification has also been published in an updated S-1 by ARK 21Shares.
A number of ether ETF applications from Hashdex, Vaneck, Ark 21shares, and Grayscale have been postponed by the SEC.