The race to offer a spot Bitcoin exchange-traded fund (ETF) continues as both Bitwise and BlackRock have submitted updated filings to securities regulators. These filings address the concerns raised in recent discussions with the U.S. Securities and Exchange Commission (SEC) and reflect the growing interest in the market for a Bitcoin ETF.
Increased Momentum
Bitwise and BlackRock filed amendments to their respective S-1 registration forms on December 4th, showcasing their commitment to securing approval for their Bitcoin ETFs. This move comes as at least ten other asset managers also intend to offer similar products, indicating the rising momentum in the quest for a spot Bitcoin ETF.
Addressing SEC Concerns
The recent discussions between the SEC and ETF applicants have raised several matters that need to be addressed. These discussions have spotlighted the potential use of in-kind creations in ETF transactions and whether cash creations should be allowed. It is rumored that initially, only cash creations will be permitted, with the possibility of in-kind creations being allowed later. Contending with these discussions, Bitwise’s and BlackRock’s updated filings are expected to present solutions that align with the regulatory framework while catering to investors’ demands.
Bloomberg ETF analyst Eric Balchunas is optimistic about the chances of spot Bitcoin ETFs gaining approval from the SEC. He suggests that there is a 90% likelihood of the SEC approving one or multiple spot Bitcoin ETFs by January 10th, 2024. However, it is worth noting that although the SEC has already approved Bitcoin and Ethereum futures ETFs, it has yet to approve any spot Bitcoin ETF, making it an exciting opportunity for asset managers to pioneer in the space.
One key aspect that has been capturing attention and speculation is whether the SEC will permit in-kind creations in spot Bitcoin ETF transactions. In-kind creations would enable participants to transact directly with Bitcoin, while cash creations would allow for transactions involving fiat currency. Balchunas’ remarks hint at the possibility of a divide among ETF issuers, with some prepared for either scenario depending on the SEC’s decision.
BlackRock’s Approach
BlackRock, in particular, has shown a keen interest in addressing the cash and in-kind creation models during its latest meeting with the SEC. The attached presentation highlights the company’s consideration of both options, suggesting that the latest amendment to their S-1 form may include adjustments that cater to the potential regulatory landscape.
The submission of updated filings by Bitwise and BlackRock signals a determined push for the approval of spot Bitcoin ETFs. With various asset managers expected to follow suit, the competition for regulatory approval is fierce. As the discussions between the SEC and ETF applicants progress, potential solutions are being developed to address concerns and align with regulatory requirements. The impending approval of spot Bitcoin ETFs would mark a significant milestone in the cryptocurrency industry, opening up new investment opportunities and providing increased legitimacy to this emerging asset class.