BasEx | BlackRock and SEC Bitcoin ETF Discussion
BlackRock and SEC Discuss Bitcoin-ETF Redemption Mechanism
23.11.2023
BlackRock and SEC Discuss Bitcoin-ETF Redemption Mechanism

The United States Securities and Exchange Commission (SEC) and BlackRock discussed possibilities for a spot exchange-traded fund based on the leading cryptocurrency.

During the meeting, as indicated in the memorandum, the management company demonstrated a presentation with two redemption mechanisms for the iShares Bitcoin Trust: via delivery of the underlying asset and in cash equivalent.

The first method involves transferring bitcoins to a market maker for subsequent sale for fiat, while the second implies exchanging digital assets from the ETF for the investor's securities.

Bloomberg's market analyst James Seyffart commented on BlackRock's preference for the redemption mechanism in bitcoins, noting its transparency for the company and its clients.

Expert Eric Balchunas emphasized that although most bitcoin fund issuers lean towards payments in the underlying asset, the SEC favors fiat, calling this issue a key aspect of the "endless drama" of debates.

On June 15, BlackRock filed an application with the Commission to launch an investment product based on the first cryptocurrency. Following this, similar requests were made by Valkyrie, Fidelity Investments, WisdomTree, and Invesco.

On August 31, the SEC postponed the decision on bitcoin-ETFs until mid-October, and at the end of September, moved the consideration of applications to January 2024.

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