BTC is retesting its year-to-date high as spot Bitcoin hopefuls BlackRock and Grayscale make progress on their applications with the U.S. Securities and Exchange Commission.
SEC documentation shows that on Nov. 20, seven representatives of BlackRock, the world’s largest asset manager, alongside four staff from Nasdaq, met with the SEC’s Division of Trading and Markets to discuss Nasdaq’s proposal to list shares in BlackRock’s pending iShares Bitcoin Trust.
The discussions centered around the redemption cycle for the proposed Bitcoin ETF, with BlackRock offering both “in-kind” and “in-cash” models facilitating the redemption of either Bitcoin or USD for shareholders respectively.
According to Bloomberg ETF analysts James Seyffart and Eric Balchunas, BlackRock is more partial to offering in-kind redemptions while the SEC’s preference is in-cash delivery.
“BlackRock and ARK standing firm on in-kind… while word is that the SEC said you need to do cash creates (to avoid ppl using unregistered brokers) if you want to get out in the first batch,” Balchunas tweeted.
“Based on this it looks like BlackRock prefers in-kind for their Bitcoin ETF (makes sense as its probably cleanest structure for them & end investors),” posted Seyffart.
BTC last changed hands for $37,673 after gaining 5% in two days, currently sitting a meager 0.6% shy of its year-to-date high of $38 posted on Nov. 16, according to CoinGecko.
Expectations that BlackRock’s proposed spot Bitcoin ETF could soon receive regulatory approval drove sharp gains for digital assets in recent months, with the combined cryptocurrency market cap growing 36% from $1.04T in mid-June to $1.42T today — its highest level since June 2022, according to CoinMarketCap.
Grayscale ETF progress
The SEC Division of Trading and Markets also met with Grayscale, the crypto-focussed asset manager, to discuss the company’s bid to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF on the same day.
Grayscale followed up with a new registration filing for the prospective fund on Nov. 22. Scott Johnsson, a finance lawyer, commented that the filing contained “little meat.”
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Johnsson highlighted expansive in-kind and “limited” in-cash redemption processes, an agreement with BNY Mellon for the firm to act as the fund’s transfer agent, and expanded risk disclosures as significant new inclusions.
Grayscale first applied to convert its Bitcoin Trust into a spot ETF in October 2021. The SEC rejected the application in June 2022, attributing its decision to insufficient protections against fraud.
However, Grayscale appealed the decision, and on Aug. 29, the U.S. District of Columbia Court of Appeals sided with the asset issuer. The court ruled that Grayscale’s application was “materially similar” to futures-based Bitcoin ETFs that previously received approval from the SEC. The SEC then declined to contest the ruling in October, further fanning the flames of rampant ETF speculation in the crypto markets.
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