Javier Hernandez In a significant move, Blackrock, the global leader in asset management, has conformed to the U.S. Securities and Exchange Commission (SEC)’s preference by adopting the cash creation model over the in-kind model for its forthcoming spot bitcoin exchange-traded fund (ETF). This strategic decision marks a pivotal change in the approach towards cryptocurrency ETFs. An ETF expert remarked, “Blackrock has decisively chosen the cash-only route. This signifies the end of the current debate, with the in-kind model being put on hold,” and further observed, “This is a positive indicator, reflecting the SEC’s efforts to align its strategies ahead of the holiday season.”
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Implementation of Cash Creation Model by Blackrock
Aligning with the SEC’s guidelines, Blackrock has updated its approach for the spot bitcoin ETF, favoring the cash creation model over the previously considered in-kind model.
In a recent amendment to their spot bitcoin ETF application, Blackrock clarified that its Ishares Bitcoin Trust would issue shares in minimum batches of 40,000, or multiples thereof. The company specified, “The Trust will redeem these baskets in return for the cash value obtained from the sale of the equivalent amount of bitcoin.” The amendment elaborates:
These redemptions will be executed in return for cash. Pending regulatory approval for in-kind transactions, these may also be conducted in exchange for bitcoin.
Additionally, Blackrock updated the ticker symbol for its spot bitcoin ETF, changing it from IBTC to IBIT. Bloomberg’s ETF analyst Eric Balchunas commented, “Blackrock’s last-minute ticker change from IBTC to IBIT isn’t entirely unexpected. IBTC was already in use within Europe for a treasury ETF, leading to potential internal confusion. IBIT, previously used by the now-defunct Defiance ETF, was chosen for its simplicity and appeal to traditional investors.”
Blackrock and other entities seeking to launch spot bitcoin ETFs have engaged in multiple discussions with the SEC, debating the merits of cash creation versus in-kind models. Despite a preference for the in-kind model and attempts to propose a modified version addressing SEC’s concerns, Blackrock has now settled on the cash creation model.
Balchunas expressed on social media platform X:
Blackrock has fully transitioned to a cash-only model. This marks an end to the ongoing debate. The focus now is on aligning all elements before the holiday season. This move is a positive sign.
What are your thoughts on Blackrock’s decision to use the cash creation model for its spot bitcoin ETF? Share your views in the comments section below.
Frequently Asked Questions (FAQs) about Blackrock Bitcoin ETF
What is the Recent Change in Blackrock’s Bitcoin ETF Strategy?
Blackrock, aligning with the U.S. Securities and Exchange Commission (SEC) guidelines, has shifted from the in-kind model to the cash creation model for its spot bitcoin exchange-traded fund (ETF). This move is seen as a significant alignment with the regulatory preferences, marking a notable development in the approach towards cryptocurrency ETFs.
Why Did Blackrock Change the Ticker for Its Bitcoin ETF?
Blackrock updated the ticker symbol for its bitcoin ETF from IBTC to IBIT. This change was made to avoid internal confusion, as IBTC was already being used for a treasury ETF in Europe. Additionally, IBIT, being simple and appealing to traditional investors, was chosen to represent the new ETF.
How Does the Cash Creation Model Work for Blackrock’s Bitcoin ETF?
In the cash creation model, Blackrock’s Ishares Bitcoin Trust will issue shares in minimum batches of 40,000 or multiples thereof. The Trust will redeem these baskets for the cash value obtained from the sale of the equivalent amount of bitcoin, as opposed to the in-kind model where transactions could involve the exchange of bitcoin directly.
What was the SEC’s Concern Regarding the In-Kind Model?
The SEC had reservations about the in-kind model for bitcoin ETFs, leading to discussions and debates with potential issuers like Blackrock. The concerns were primarily regarding the regulatory and operational complexities associated with the in-kind model, which involves direct exchange of bitcoin.
How Has the Market Reacted to Blackrock’s Decision?
Market reaction to Blackrock’s decision to adopt the cash creation model for its bitcoin ETF has been generally positive. Analysts view this move as a pragmatic alignment with regulatory preferences, potentially paving the way for more mainstream acceptance of cryptocurrency-based financial products.
More about Blackrock Bitcoin ETF
- Blackrock Adopts Cash Model for Spot Bitcoin ETF
- U.S. Securities and Exchange Commission (SEC)
- Ishares Bitcoin Trust
- Bloomberg ETF Analyst Eric Balchunas
- SEC’s Concerns about In-Kind Model
- Market Reaction to Blackrock’s Decision
5 comments
SEC had concerns, but Blackrock’s playin’ by the rules now. Market’s cheerin’! mainstream acceptance here we come!
cash creation? not bad. bitcoin for cash, easy peasy. good for the holiday season!
curious about the impact on other ETFs. Blackrock’s move could set the trend for the whole industry.
ticker change makes sense, no confusin’. IBIT is cleaner than IBTC. boomers will like it.
wow, big move by Blackrock! no more in-kind, cash is king for their bitcoin etf. SEC’s sayin’ “cash it out”!