Many of the required revisions and adjustments are being carried out urgently by most companies, fueled by rumors that there may be a possible approval in January.
BlackRock is making a strategic move in its plans for a bitcoin exchange-traded fund (ETF) by revising its approach to overcome regulatory obstacles. The asset management giant has updated its filing to feature cash redemptions instead of the previous in-kind model, where shares were converted directly to bitcoin. This change aligns with the preferences of the Securities and Exchange Commission (SEC), which has not shown a positive outlook on similar ETF applications in the past.
Under the new cash redemption model, investors will receive the fiat currency value of their shares when selling, rather than bitcoin itself. Several firms have applied for bitcoin ETFs due to the increasing demand, but the SEC is concerned about the risks associated with crypto innovation and prioritizes the protection of investors.
Asset Managers Adjust Their Proposals to Align with SEC’s Spot ETF Requirement
The SEC has delayed approvals for companies like Grayscale, Ark 21Shares, and Hashdex, citing worries about market manipulation and some of their approaches. This has also led most of the companies applying for spot BTC ETF to revise their proposals to align more closely with the regulator’s requirements. By adopting the SEC’s preferred redemption structure, BlackRock aims to address these concerns that have hindered other applicants. ARK 21Shares has also recently updated its approach to share redemptions following a meeting with the SEC. It has agreed to the cash method for its proposed product instead of the in-kind model.
Many of the required revisions and adjustments are being carried out urgently by most companies, fueled by rumors that there may be a possible approval in January. If these rumors prove true, next month could mark a significant turning point for both these companies and the crypto industry as a whole.
The strict oversight and requirements imposed by the SEC reflect the lingering uncertainty that regulatory bodies still have regarding the crypto industry. While under pressure to approve the proposals, the commission is determined to leave no stone unturned in safeguarding the interests of potential investors who will flock to this asset once it receives final approval.
While approval is not yet guaranteed, given the evolving regulatory landscape, BlackRock’s compliance strategy directly aligns with the SEC’s priorities. This positions the company with an added advantage as it seeks to offer a spot BTC ETF, along with other large firms vying to provide this investment option. Consequently, BlackRock aims to spearhead the institutional push for broader regulated crypto adoption, pending regulatory permissions.
Nonetheless, questions persist regarding whether cash redemptions sufficiently safeguard investors from bitcoin’s widely recognized volatility, given that the value of their assets will fluctuate in accordance with bitcoin’s unpredictable price swings. However, considering the SEC’s likelihood of rejecting any proposal that falls below its standards, BlackRock’s recent revision enhances its prospects of entering the Bitcoin ETF market in 2023.