BlackRock Adapts Bitcoin ETF Proposal with Cash Redemptions to Address SEC Concerns

BlackRock Adapts Bitcoin ETF Proposal with Cash Redemptions to Address SEC Concerns

Crypto News – BlackRock has recently updated its proposal for a spot bitcoin exchange-traded fund (ETF), introducing cash redemption features in a strategic move to align with the preferences of the U.S. Securities and Exchange Commission (SEC). This modification, made on Monday, significantly enhances the likelihood of BlackRock receiving a pioneering approval for its ETF in the United States.

In this revised proposal, BlackRock’s ETF incorporates mechanisms for both cash creation and redemption, a model that is particularly endorsed by the SEC. BlackRock, recognized as the world’s premier asset manager, joins a growing list of companies that have revised their ETF proposals. This trend comes amid widespread speculation that the SEC may soon greenlight a series of spot bitcoin ETF applications, potentially as early as January.

Initially, BlackRock applied for its iShares Blockchain and Tech ETF with an in-kind redemption model. However, the SEC, prioritizing investor protection and market integrity, raised concerns over this approach. Typically, ETFs offer two primary mechanisms for redemption and creation: in-kind or cash. The in-kind mechanism, favored by many for its appeal to investors, allows firms to exchange ETF shares for the actual bitcoin they represent. Conversely, cash redemptions, which the SEC deems safer and more user-friendly, involve exchanging shares for their cash equivalent.

Responding to the regulatory landscape, BlackRock has agreed to implement cash redemptions, at least until in-kind redemptions receive approval. This decision is reflective of a broader trend, as over a dozen firms have submitted applications for similar ETFs. Notably, ARK 21Shares has also filed a revised S-1 incorporating a similar cash redemption feature.

The SEC, meanwhile, has postponed decisions on several other ETF applications from entities such as Grayscale, Ark 21Shares, Vaneck, and Hashdex, indicating a cautious and deliberate approach to this evolving investment landscape.