Top Bitcoin ETF contender BlackRock [BLK] and the Securities and Exchange Commission [SEC] engaged in a second round of discussions concerning the iShares Bitcoin Trust under NASDAQ Rules 57119 [d], marking the second meeting within a month to address rule changes necessary for the potential listing of a Bitcoin exchange-traded fund. Altogether, the formal SEC meetings among current BTC ETF applicants have now reached 24.
BlackRock, managing assets totaling $9.5 trillion, has been actively seeking approval for its fund and has collaborated with Nasdaq in discussions with the SEC, focusing on redemptions—a critical element in managing scenarios where investors exit and redeem the value of their shares.
The primary point of contention in the approval process revolves around redemptions, with issuers strongly advocating for the in-kind redeem option model while encountering resistance from the SEC, which favors cash redemption. The SEC’s preference for cash redemption is a strategic move, placing the responsibility on issuers to directly transact in BTC and avoiding reliance on unregistered subsidiaries or third-party entities for Bitcoin transactions.
BlackRock highlights that the in-kind redemption model entails the transfer of Bitcoin from the ETF to the investor, facilitated by authorized market participants like market makers. This approach is seen as potentially more tax-efficient, as it eliminates the need to sell securities to meet redemptions, thereby avoiding triggers for capital gains taxes.
SEC Acknowledge Pando’s Bitcoin ETF Application
Notably, BlackRock recently yielded to pressure and introduced a significant change to its proposed spot Bitcoin ETF. The alteration allows authorized participants [APs], entities responsible for creating and redeeming ETF shares, to use cash instead of BTC for transactions.
In a related development, the U.S. Securities and Exchange Commission formally acknowledged Pando Asset AG’s application for a spot Bitcoin ETF, marking a noteworthy step in the regulatory process. In a notice published on December 18, the SEC initiated a solicitation of comments on a proposed rule change submitted by Cboe BZX, outlining the specifics of Pando Asset AG’s spot BTCETF.
Pando Asset AG became the 13th issuer contending for a stake in what the cryptocurrency community anticipates could be a multi-billion dollar product.