BlackRock Adjusts Bitcoin ETF Proposal Amid Anticipated SEC Approvals

• Blackrock Submits Revised Spot Bitcoin ETF Proposal
• ETF to Feature Cash Creation and Redemption Mechanisms
• Proposition of In-Kind Redemption Model
• Understanding Redemption Mechanisms
• Numerous Firms Have Filed ETF Applications
• Update (Dec. 19, 04:55 UTC)

Blackrock Submits Revised Spot Bitcoin ETF Proposal

On a recent Monday, Blackrock submitted an updated proposal for a spot bitcoin exchange-traded fund (ETF). This move is likely to enhance its chances of obtaining an unprecedented approval in the U.S.

ETF to Feature Cash Creation and Redemption Mechanisms

The refurbished proposal will have the Blackrock's ETF showcasing cash creation and redemption mechanisms. This model is favored by the Securities and Exchange Commission (SEC). Blackrock, the world's largest asset manager, has joined the array of firms that have revised their proposals amid speculation that the SEC may approve a series of spot bitcoin ETF applications.

Proposition of In-Kind Redemption Model

Last month, Blackrock submitted an application for its iShares Blockchain and Tech ETF. The proposal was for an in-kind redemption model. However, the SEC critically examined the proposal, citing concerns about investor safety and market manipulation.

Understanding Redemption Mechanisms

ETFs typically feature either of two types of redemption and creation mechanisms: In-kind or cash. An in-kind redemption structure, which many firms believe is more attractive to investors, allows firms to redeem shares for bitcoin held by their ETFs. Conversely, cash redemptions, which the SEC considers to be a safer and more accessible redemption option, replace those shares with their equivalent cash value. Blackrock is among the several firms that have agreed to issue cash redemptions until in-kind redemptions are approved.

Numerous Firms Have Filed ETF Applications

More than a dozen firms have filed applications for ETFs. ARK 21Shares too, has published a revised S-1 with a similar change. The SEC has postponed several ether ETF applications from firms like Grayscale, Ark 21shares, Vaneck, and Hashdex.

Update (Dec. 19, 04:55 UTC)

The content has been updated with additional context and information.

Edited by Jonathan Stoker