BlackRock and SEC in Decisive Dialogue on Launch of Bitcoin Spot ETF

In the most recent wave of movements in the cryptocurrency universe, the giant BlackRock, recognized as the largest asset manager in the world, had a significant meeting with the US Securities and Exchange Commission (SEC). The focus of the discussion, which took place on Monday, centered on BlackRock’s ambitious request for a spot Bitcoin exchange-traded fund (ETF), news that gained prominence thanks to Bloomberg cryptocurrency analyst James Seyffart.

Seyffart, using his Twitter platform, shared valuable insights from the meeting. BlackRock is leaning toward an “in-kind” ETF process, as opposed to the traditional cash-based approach. In this model, authorized participants will deal directly with Bitcoin, delivering and receiving the cryptocurrency, rather than transacting with cash to buy and sell the underlying asset.

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

The choice for this method is not random. Seyffart argued that this approach is the most efficient for both BlackRock and its investors. The reason is clear: it avoids the risks associated with price slippage and the tax consequences that often accompany cash transactions.

In this scenario, an additional element emerges. Eric Balchunas, another Bloomberg analyst, revealed an intriguing facet of this process. He highlights that while BlackRock and ARK are firm in their preference for the “in-kind” process — advantageous to investors in terms of spreads and taxes — the SEC has a condition. To release the first batch to the market, the SEC suggests a cash-based process. This, according to Balchunas, is to prevent the use of unregistered brokers, a legitimate concern in the dynamic cryptocurrency market.

This dialogue between BlackRock and the SEC is more than just a meeting; represents a potential milestone in the field of cryptocurrencies. The approval of a spot Bitcoin ETF by the SEC could herald a new era for investors, providing a more direct and possibly safer way to invest in Bitcoin.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptocurrencies carries a risk of financial loss.