Leading US spot Bitcoin (BTC) exchange-traded fund (ETF) applicants are amending their filings to comply with the cash redemption model required by securities regulators.
Investment managers BlackRock and Cathie Wood’s ARK Invest have updated the S-1 registration statement for their spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC).
The S-1 Amendment filed on December 18 relates to the cash generation and redemption model for the proposed in-kind Bitcoin ETF, with BlackRock and ARK calling for cash rather than in-kind redemptions, meaning non-monetary payments such as BTC. Accept the repayment system.
ARK’s registration statement implied that the ARK 21Shares Bitcoin ETF would only allow cash creation and redemption. The document mentions “potential spot issuances and share repurchases” and states that the ETF may, subject to regulatory approval, allow authorized participants to create and repurchase shares through spot transactions.
BlackRock later filed a similar update, emphasizing that spot trading could occur but would be subject to regulatory approval.
BlackRock’s iShares Bitcoin Trust ETF S-1 amendment adds, “Such transactions will be effected in exchange for cash.”
“Such transactions may also take place in exchange for Bitcoin if the Nasdaq Stock Market receives the necessary regulatory approvals to allow the Trust to create and redeem spot shares for Bitcoin.”
According to Bloomberg ETF analyst Eric Balchunas, ARK and its ETF partner 21Shares did not want to generate cash and even came up with creative alternatives for in-kind redemptions. “So if they capitulate, it means the SEC won’t budge and the debate is over. If they want approval in January, that’s probably a good thing,” the analyst wrote.
The SEC’s “cash-only” requirement means authorized participants (APs) must bring an appropriate amount of cash to the table to get more shares of an ETF, according to investor and consultant Vance Harwood.
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“Some funds also allow ‘in-kind’ creation. In an in-kind issuance, the AP takes the assets tracked by the ETF and exchanges them for ETF shares. Apparently the SEC is not keen on allowing this for spot Bitcoin ETFs,” Harwood said. He added that the SEC’s position is “understandable.”
“It will make it clear where the ETF gets its underlying bitcoins. The ETF will probably purchase them from a reputable exchange, whereas allowing in-spot transfers means there is no way to know where the transferred bitcoins came from.”
Global ETF provider WisdomTree also filed an S-1 amendment for its spot Bitcoin ETF, WisdomTree Bitcoin ETF, on December 18, maintaining in-kind creation and redemption options.
The registration statement reads, “An Authorized Participant acting pursuant to the authority of a registered stock holder may surrender a Basket in exchange for an applicable amount of Bitcoin or cash,” and APs may create a Basket or redeem it via: He added that it can be done. -Type options.
Financial lawyer Scott Johnsson predicted in mid-December that ETF applicants would eventually have to bow down to using the cash generation and redemption model for ETFs. Previous ETF applicants Invesco and Galaxy also updated their S-1 registration statements to a “cash only” model.
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