BlackRock recently made amendments to its Bitcoin spot ETF application, with a preference for a cash creation and redemption model as seemed to be preferred by the Securuties and Exchange Commission (SEC). The amendment also confirms that the iShares Bitcoin Trust ETF will be listed under the ticker IBIT on the Nasdaq exchange.
BlackRock updates its Bitcoin spot ETF
Yesterday, Monday, December 18, BlackRock updated its Bitcoin spot ETF application via an S-1 amendment.
– James Seyffart (@JSeyff) December 18, 2023
Changes made via an “S-1 Amendment” typically include adjustments in the ETF’s structure, changes in investment objectives, updates on the ETF’s management, or other important information. These changes may result from discussions with the Securities and Exchange Commission (SEC) or from internal revisions by the ETF issuer to reflect necessary adjustments or clarifications.
In this case, we can retain 2 important pieces of information from this modification. Firstly, BlackRock seems to favor a cash creation and redemption model, which is what various analysts believe the SEC wanted. However, the door remains open for an in-kind model, but this remains extremely unlikely according to Eric Balchunas, analyst at Bloomberg Intelligence.
When wishing to purchase shares in this ETF, authorized participants (APs), such as licensed brokers for example, acquire these shares using cash rather than Bitcoins. In exchange for this money, new units are issued, thus broadening the ETF’s investor base.
Symmetrically, in the event of a resale, the cash redemption process comes into play. Instead of receiving Bitcoins in exchange for their shares, investors receive an equivalent amount in cash.
This simplifies the transaction process and offers investors flexibility, while linking the value of the Bitcoin ETF to the underlying value of Bitcoin. Ultimately, it is BlackRock that is responsible for purchasing the Bitcoins underlying the ETF, which are hosted by a custodian, in this case Coinbase. But the BTCs in question belong both to BlackRock and to the investors who have purchased shares in the Bitcoin ETF.
IBIT: this will be the ticker for BlackRock’s cash BTC ETF
The document also confirms that the iShares Bitcoin Trust ETF carried by BlackRock will be offered under the ticker IBIT on the Nasdaq exchange.
Only 3 weeks remain before the SEC has to make a final decision on the cash Bitcoin ETF from Ark Invest & 21Shares, who filed their application first. While 13 entities were already in the running in the ETF race, crypto-focused fund manager 7RCC has just filed an application with Gemini defined as custodian.
Ark Invest & 21Shares as well as Wisdom Tree have also filed S-1 amendment documents with the SEC regarding their own Bitcoin ETF application, most likely following their meeting with the regulator.