BlackRock Updates Spot Bitcoin ETF with Ticker Called IBIT

Financial giant BlackRock has made significant progress in the cryptocurrency market with its latest move: the creation of a bitcoin spot ETF, officially named IBIT. This news, revealed in a modified S-1 document on Monday with the Securities and Exchange Commission (SEC), marks an important milestone for both BlackRock and the cryptocurrency market.

BlackRock’s recently updated document also clarifies details about the creation and redemption mechanisms the fund intends to use. These aspects were topics of intense discussion in recent meetings between BlackRock representatives and SEC officials. The latest approach indicates a preference for the cash redemption model, which analysts say is favored by the SEC. However, the document leaves open the possibility of an “in-kind” redemption process, depending on regulatory approval.

At the time of publication, the price of BTC was quoted at US$42,687.00, up 3.3% in the last 24 hours.

According to the file, “The Trust continually issues and redeems baskets.” Transactions will be carried out primarily in cash, although the option of “in-kind” transactions remains a possibility, subject to regulatory approval.

Eric Balchunas, an analyst at Bloomberg Intelligence, commented on BlackRock’s strategy: “BlackRock has only sold money. This is basically a wrap. End of debate. Cash will have to wait. It’s all about putting ducks in on the holidays. Good sign.”

BlackRock has gone cash only. That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in row bf holidays. Good sign. https://t.co/vgocs1aIwS

— Eric Balchunas (@EricBalchunas) December 19, 2023

BlackRock’s preference for an “in-kind” redemption model reflects its desire for greater flexibility in portfolio management. On the other hand, the cash model, preferred by the SEC, would require BlackRock to take bitcoin out of storage, sell it, and return the cash value to investors who want to redeem their shares.

Recently, memos revealed that companies including BlackRock and Fidelity have been meeting with the SEC to discuss redemption processes for a bitcoin spot ETF. These discussions emphasize the growing importance and regulatory complexity involved in cryptocurrency-based financial products.

On the same day, other companies, including Ark 21Shares and WisdomTree, also filed modified S-1 filings with the SEC for their own bitcoin spot funds. The SEC’s final decision is still pending, but the market has reacted positively, fueling expectations that approval is closer.

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.