Black Rock's ETF proposal now includes cash redemptions, a concession to the SEC that could improve the fund's chances of approval
BlackRock submitted a revised proposal for a spot Bitcoin exchange-traded fund (ETF) on Monday in an effort to appease regulators, potentially boosting its chances of receiving first approval in the United States.
Under the updated proposal, BlackRock's ETF would use a cash creation and redemption mechanism, a model favored by the U.S. Securities and Exchange Commission (SEC). The world’s largest asset manager is one of several companies to update its proposals recently, amid speculation that the U.S. Securities and Exchange Commission could approve a raft of spot Bitcoin ETF applications as early as January.
BlackRock filed for the first time last month for its iShares blockchain and technology ETF, proposing a physical redemption model.
However, the U.S. Securities and Exchange Commission scrutinized the proposal, raising concerns about investor safety and market manipulation. ETFs typically have one of two redemption and creation mechanisms: physical or cash.
Many companies say the in-kind redemption structure, which allows companies to redeem Bitcoin shares held by their ETFs, is more attractive to investors. The SEC considers cash redemptions to be the safer and easier redemption option by replacing the shares with equivalent cash value.
BlackRock is the latest of several companies to agree to issue cash redemptions before in-kind redemptions are approved.
This is a clear signal that the SEC prefers cash creation methods in initial ETF product approvals.
