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BlackRock, Grayscale, and More in Hush-Hush Talks with SEC: Bitcoin ETF on the Horizon?

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  • Grayscale and BlackRock are actively engaging with the SEC to launch the first spot Bitcoin ETF in the United States.
  • Discussions focus on the operational models of the ETF, with BlackRock favoring an “in-kind” redemption model.

A New Era in Crypto Investments: The Race for the First US Spot Bitcoin ETF

In a significant development for the cryptocurrency sector, Grayscale and BlackRock are spearheading efforts to introduce the first spot Bitcoin Exchange-Traded Fund (ETF) in the United States. This move, indicative of the evolving landscape of digital asset investments, involves close consultations with the U.S. Securities and Exchange Commission (SEC).

Debating the Ideal ETF Model: Cash vs. In-Kind Redemption

At the heart of these discussions is the decision between two operational models for the ETF: the cash model and the “in-kind” redemption model. BlackRock has shown a preference for the latter, deemed a cleaner option for both asset managers and investors. This model involves a five-step process where ETF shares are delivered to a Transfer Agent, contrasting with the cash model that requires moving Bitcoin out of cold storage and trading it for USD.

The “in-kind” model, favored by BlackRock, is seen as a more streamlined approach. It starts with a Market Maker placing an order through an Authorized Participant, followed by the ETF issuer approving the order and the Market Maker purchasing ETF shares on a Listing Exchange. The ETF shares are then delivered to a Transfer Agent, with the Bitcoin custodian releasing the coin to the Market Maker.

Grayscale’s Revised Filing and the SEC’s Stance

Grayscale, on the other hand, has submitted a revised spot Bitcoin ETF filing, following discussions with the SEC. Their filing indicates a preference for cash redemptions only upon approval by the sponsor, reflecting a cautious approach in line with regulatory expectations. The SEC’s current stance leans towards cash creates, with concerns around broker-dealers handling Bitcoin directly.

Implications for the Crypto Market and Investors

These developments are closely watched by the crypto community, as the approval of a spot Bitcoin ETF in the US would mark a watershed moment. It would not only legitimize digital assets further but also offer investors a more direct and regulated way to invest in Bitcoin.

As the crypto industry awaits the SEC’s decision, the discussions between Grayscale, BlackRock, and the regulatory body signal a growing maturity and acceptance of cryptocurrencies in mainstream finance. This dialogue represents a crucial step in bridging the gap between traditional financial systems and the innovative world of digital assets.

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628