BlackRock Bends Knee To SEC’s Cash-Only Model As Trader Says Spot Bitcoin ETF Now ‘99.9% Done Deal’

BlackRock has filed an amended S-1 with the Securities and Exchange Commission (SEC) to comply with the cash redemption model demanded by the regulator. The amendment boosts BlackRock’s odds of securing the first-ever spot BTC exchange-traded fund (ETF) in the United States.

BlackRock’s Strategic Shift To Appease SEC

The world’s largest asset manager, BlackRock, has updated its S-1 registration statements for a spot-based bitcoin ETF with the SEC.

Under the revised proposal, BlackRock’s spot ETF will feature the cash redemption system rather than in-kind redemptions, a topic of recent talks between the company and SEC officials.

The fund, identified by the ticker IBIT, can keep its share prices aligned with the underlying asset (Bitcoin) by creating or redeeming shares in-kind, exchanging Bitcoin for ETF shares, or with cash by purchasing or selling BTC on the open market.

The revised filing shows BlackRock bending the knee to use a cash creation and redemption design favoured by the SEC. However, the asset manager hopes to enable in-kind creations eventually following regulatory approval.

“These transactions will take place in exchange for cash. Subject to the Nasdaq Stock Market receiving the necessary regulatory approval to permit the trust to create and redeem shares in-kind for Bitcoin, these transactions may also take place in exchange for Bitcoin,” the latest iteration of BlackRock’s filing reads.

“BlackRock has gone cash only,” Bloomberg Intelligence analyst Eric Balchunas said on the X (formerly Twitter) platform. “That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in a row bf holidays. Good sign.”

Spot Bitcoin ETFs On The Horizon

BlackRock is not the only aspiring issuer bowing to SEC pressure. Cathie Wood’s ARK Invest and Wisdom Tree also agreed on Monday to comply with the so-called cash redemption mechanism.

The SEC has yet to approve a spot Bitcoin ETF and is due to begin making final decisions on the product in early January 2024.

Hopes that the SEC will greenlight a spot bitcoin ETF soon have risen in recent months, with market onlookers and investors pointing to a recent court verdict ordering the commission to re-review Grayscale’s ETF bid and the regulator’s increased engagement with applicants.

“The level of SEC engagement and back/forth/changes on the bitcoin ETF tells us this is a 99.9% done deal,” trader and investor Bob Loukas observed on X.

Bitcoin’s price rose 5.4% over the past 24 hours to trade for $43,177 at press time, according to CoinGecko.

Meanwhile, the SEC has pushed back its decision on several ether ETF applications from Grayscale, ARK21Shares, Hashdex, and Vaneck to May next year.