The BlackRock proposal now includes a mechanism for redeeming units for fiat money. This is a redemption model that the SEC considers safer for investors compared to redemption in BTC
BlackRock has updated its application for a spot bitcoin-ETF to increase the chances of its approval by the US Securities and Exchange Commission (SEC). The management company’s proposal now calls for a fiat money redemption mechanism for the fund’s units. This is the model favored by the U.S. regulator.
The world’s largest asset management company has become the latest of several firms. Which updated statements amid rumors that the SEC may approve a number of bitcoin-ETF applications as early as January. ARK Investments also previously made similar changes to its application for the ARK 21SHARES Bitcoin ETF.
BlackRock applied to launch the iShares Bitcoin Trust exchange-traded fund in June this year. And at the same time offering a redemption model in kind (in bitcoins). However, the U.S. Securities and Exchange Commission, analyzed the proposal. And raised concerns about investor safety and market manipulation.
ETFs typically have one of two types of redemption and issuance mechanisms: in-kind or cash. In-kind redemption structure. And which many companies believe is more attractive to investors, allows companies to redeem units for bitcoins. The SEC considers it safer and more affordable to redeem for fiat money.
In this case, if an investor wants to redeem the fund’s units, BlackRock would have to withdraw the bitcoins from the vault. And sell them and pay the investor the required amount in fiat money.
“The trust issues and redeems blocks of 40,000 units on an ongoing basis. These transactions will be done in exchange for cash. Subject to regulatory approval, these transactions will also be able to be conducted in exchange for bitcoins,” BlackRock said in its new filing.
The company also provided a ticker symbol for the fund to be created in the documents. The spot bitcoin-ETF is expected to trade on NASDAQ under the name IBIT.
Valkyrie, Fidelity Investments, ARK Investments, Grayscale, WisdomTree and Invesco are also awaiting approval from the SEC.
Bitcoin-ETF issuers have already advanced to key details in their negotiations with the SEC. Our experts note that the deadline for the regulator to decide whether to approve, reject or postpone a decision on bitcoin-ETF applications is set for mid-January.
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