Grayscale, BlackRock Meet with SEC Over Spot Bitcoin ETF Filing
Meeting memo reveals a change in BlackRock’s proposed ETF model, from direct exposure to indirect exposure to Bitcoin.
Memos made public by the United States Securities and Exchange Commission (SEC) have shown that leading asset management firms, BlackRock and Grayscale, both met with the regulator on November 20 to discuss the listing of their respective Bitcoin spot exchange-traded funds (ETFs).
The news of these meetings comes amid speculation the SEC may approve a Bitcoin spot ETF for listing on US markets in the next few months.
Grayscale Meets With SEC
The memo from Grayscale’s meeting shows the asset manager met with representatives from the SEC’s Division of Trading Markets and discussions focused on “NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E.”
Grayscale’s meeting with the SEC comes after its filing last month to have its Bitcoin Trust product converted to a spot Bitcoin ETF, following a ruling from a Washington D.C. based circuit court that the SEC must re-examine the firm’s application.
If approved, Grayscale plans to list shares for its Bitcoin ETF on NYSE Arca under the symbol GBTC.
BlackRock Presents Proposed ETF Models
The memo from BlackRock’s meeting shows representatives from NASDAQ were also in attendance and the discussions concerned “the NASDAQ Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust under NASDAQ Rule 5711(d).”
In addition, BlackRock also presented their proposed models for their ETF, which included both ‘in-kind’ and ‘in-cash’ models. These ETF models provide indirect exposure to Bitcoin, unlike earlier models, which had provided direct exposure.
This follows an earlier move by ARK 21Shares to amend their Bitcoin ETF to an indirect exposure model, which is seen as more likely to be approved by regulators.
According to Bloomberg Intelligence ETF analyst James Seyffart, the ‘in-kind’ ETF model seems to be preferred by BlackRock, which he said “makes sense as it’s probably cleanest structure for them & end investors.”
Looks like @BlackRock also met with SEC! There’s a couple slides in relation to in-kind vs cash creation. 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)
h/t @btcNLNico https://t.co/AK0XspL4zJ pic.twitter.com/eeuUT9T5mn
— James Seyffart (@JSeyff) November 22, 2023
Shift To Indirect Exposure Models Improves Odds Of Approval
The trend of Bitcoin ETF applications to shift to indirect exposure models is seen as likely to improve the odds of approval.
According to Eric Balchunas, a Senior ETF Analyst at Bloomberg the SEC prefers in-cash models, mainly because of their regulatory advantages:
Cash creates makes sense IMO bc broker dealers can’t deal in bitcoin so doing cash creates puts onus on issuers to transact in bitcoin and keeps broker dealers from having to use unregistered subsidiaries or third party firms to deal w the btc. Less limitations for them overall.
However, many ETF applicants seem to prefer in-kind models due to their tax advantages and reduced spread. It’s yet to be seen which model is more likely to be successful but Balchunas is confident a Bitcoin spot ETF will be approved at some stage:
Only 2-3 filers had planned cash creates, the rest wanted to do in-kind. So may have to adjust or risk delay. Anyway, this doesn’t change our 90% odds up or down but is good sign the process marching and SEC has a path fwd in the plumbing that they are comfortable with.
Bitcoin ETF Will See A ‘Flood’ Of Money
Speaking on CNBC, former president of the NYSE and founder of crypto exchange Bullish, Tom Farley, said he’s not particularly confident a Bitcoin spot ETF is likely to be approved in the short-term, citing issues around the regulatory status of crypto:
I’m a little less optimistic of the immediacy of an approval, in other words November or even December. The current Chairman and the SEC have said that they believe pretty much everything in crypto, with the exception of Bitcoin — sometimes Ethereum and possibly stablecoins — are securities and that securities, at least in the United States, need to trade on a nationally recognised exchange and they do not today. And I think these two issues at the moment are interwoven.
Despite his uncertainty about timing, Farley was himself rather bullish about the impact a Bitcoin ETF will have on the industry:
Money will flood into the industry with a Bitcoin ETF, it’s just easy to buy. People believe in Bitcoin, Bitcoin’s gonna be here, Bitcoin’s a great invention.
The post Grayscale, BlackRock Meet with SEC Over Spot Bitcoin ETF Filing appeared first on Crypto News Australia.
Filed under: Bitcoin - @ November 23, 2023 5:11 am