BlackRock and WisdomTree’s S1 Amendments Propel Bitcoin Price Higher, $50,000 Incoming?

• BlackRock has updated its Bitcoin ETF proposal to include cash redemptions, a shift aimed at meeting SEC requirements.
• This amendment could significantly increase the chances of approval for BlackRock’s groundbreaking U.S. spot bitcoin ETF.

In a notable development within the cryptocurrency investment landscape, BlackRock, the world’s largest asset manager, has filed a revised proposal for a spot bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC).

This strategic update introduces cash creation and redemption mechanisms, a move likely to enhance the fund’s prospects for approval. As I am outlining in the following tweet, and as we have reported on CNF earlier, until today, the SEC has not yet approved a single BTC spot ETF. The community and institutional investors with billions of dollars are eagerly waiting for that day to come.

Exciting developments in the ETF world! #BlackRock's spot #BitcoinETF, trading as #IBIT, reveals updates on creation & redemption mechanisms, discussed in a recent meeting with the #SEC. #Ark #21Share's & #WisdomTree also filed similar updates. #Bitcoin #ETF #BTC pic.twitter.com/0zpHeR08N8

— Collin Brown (@CollinBrownXRP) December 19, 2023

Understanding the Significance of Cash Redemptions

Traditionally, ETFs operate under one of two redemption frameworks: in-kind or cash-based. In-kind redemptions allow investors to exchange their ETF shares for the actual assets held by the fund, in this case, bitcoin. However, BlackRock’s pivot to a cash redemption model aligns with the SEC’s preference, which views cash redemptions as a safer and more accessible option for investors. This adjustment is pivotal as it addresses regulatory concerns regarding investor safety and market manipulation risks associated with in-kind redemptions.

BlackRock’s initial application for the iShares Blockchain and Tech ETF, submitted last month, proposed an in-kind redemption model. However, this approach drew scrutiny from the SEC, prompting BlackRock to revise its proposal. The change to a cash redemption model represents a significant concession to regulatory standards, potentially paving the way for the approval of a spot bitcoin ETF in the United States, a milestone eagerly anticipated by the crypto community.

The Larger Implications for the Crypto ETF Landscape

The move by BlackRock comes amidst a broader context where several firms have updated their ETF proposals, speculating that the SEC might approve a series of spot bitcoin ETF applications as early as January. This trend indicates a growing alignment between investment firms and regulatory expectations in the cryptocurrency space.

Notably, more than a dozen firms, including ARK 21Shares, have filed for ETF applications, with some, like ARK 21Shares, also revising their proposals to incorporate similar changes. This collective shift towards cash redemptions illustrates the evolving dynamics of cryptocurrency ETFs and the increasing importance of regulatory compliance in shaping the future of crypto investments.

In summary, BlackRock’s latest move to include cash redemptions in its Bitcoin ETF proposal marks a critical step in bridging the gap between traditional financial mechanisms and the burgeoning world of cryptocurrencies. By adapting to regulatory standards, BlackRock not only enhances its chances of securing a historic approval but also sets a precedent that could influence the trajectory of cryptocurrency ETFs in the United States.

At press time, Bitcoin has reacted positively, showing a surge of 4.27% in the last 24 hours, reaching a price of $43,000.