BlackRock, WisdomTree, and Ark Modify Bitcoin ETF Proposals to Align with SEC’s Cash-Only Structure

Bitcoin Spot ETFs Updates by Major US Asset Managers

Leading US asset managers are revising their ETF filings to issue Bitcoin spot ETFs, eagerly awaiting the SEC’s approval to list such products. In light of recent reports, BlackRock, Cathie Wood’s ARK, and WisdomTree are amending their filings to align with the cash redemption model required by the U.S. Securities and Exchange Commission (SEC). ARK Invest and BlackRock have already updated their S-1 registration statements in this regard.

Amended S-1 Registrations Show Flexibility for Cash Redemption System

The amended S-1 registrations submitted to the U.S. SEC on December 18 indicate BlackRock’s and ARK’s readiness to adopt a cash redemption system instead of the originally proposed in-kind redemptions, a method often associated with non-monetary assets such as Bitcoin. ARK’s improved filing indicates that the ARK 21Shares Bitcoin ETF will allow cash creations and redemptions, with the possibility of in-kind transactions also mentioned, yet contingent on regulatory approval. Similarly, BlackRock’s filing includes provisions for non-cash transactions, still awaiting the SEC’s green light, and suggests that cash may not be the sole medium for transacting, with the possibility of Bitcoin exchanges, dependent on the Nasdaq Stock Market’s approval for in-kind share creations and redemptions for Bitcoin.

Bloomberg Analyst Suggests ARK and BlackRock May Yield to SEC Demands

Bloomberg ETF analyst Eric Balchunas commented that ARK and its partner 21Shares initially preferred in-kind redemptions over cash creations but might relent to the SEC’s firm stance on cash transactions. Balchunas implies that a compromise from ARK to accommodate the SEC could prompt BlackRock to follow suit, which would expedite the approval process for Bitcoin ETFs.

SEC’s Position on Cash-Only Transactions Deemed Understandable by Investor

Vance Harwood, a prominent investor, expressed his understanding of the SEC’s position on Bitcoin ETF approvals, emphasizing that cash-only transactions would restrict Authorized Participants (APs), entities that liaise directly with ETFs, to obtaining more shares only through specified cash contributions. Harwood argued that the SEC’s reluctance to incorporate in-kind creation into Spot Bitcoin ETFs is logical, favoring transaction transparency and regulated exchange-based acquisitions over the untraceable nature of in-kind transfers. Despite a minimal effect on Bitcoin ETFs due to the cash constraint, which could increase the volume of transactions, WisdomTree has also updated its S-1 filing, leaving the in-kind redemption and creation avenues open pending approval.

Prospects for Imminent Bitcoin ETF Approval Post-Holidays

With recent regulatory developments, the path to Bitcoin ETF approval seems more transparent, with growing optimism in the investment community that approval could be forthcoming soon after the holiday season.

Read More