Monday, May 27, 2024

Blackrock, the world’s largest asset manager, has agreed to the U.S. Securities and Exchange Commission (SEC)’s preference for the cash creation model rather than the in-kind model for its spot bitcoin exchange-traded fund (ETF). “Blackrock has gone cash only. That’s basically a wrap. Debate over. In-kind will have to wait,” said an ETF analyst. “Good sign,” he added, noting that the SEC is “getting ducks in row” before the holidays.

Blackrock Adopts Cash Creation Model

Blackrock, the world’s largest asset manager, has yielded to the U.S. Securities and Exchange Commission (SEC)’s preference for the cash creation model, instead of the in-kind model, for its spot bitcoin exchange-traded fund (ETF).

The asset manager filed an amendment to its spot bitcoin ETF filing on Monday. The amendment details that Blackrock’s Ishares Bitcoin Trust issues shares in baskets of 40,000 or integral multiples thereof, noting that “Baskets may be redeemed by the Trust in exchange for the cash proceeds from selling the amount of bitcoin corresponding to their redemption value.” The amendment continues:

These transactions will take place in exchange for cash. Subject to the in-kind regulatory approval, these transactions may also take place in exchange for bitcoin.

In its latest amendment, Blackrock also switched the ticker for its spot bitcoin ETF from IBTC to IBIT. Bloomberg ETF analyst Eric Balchunas commented: “I’m not totally surprised Blackrock switched its ticker last minute. IBTC was already a ticker they used in Europe for a treasury ETF so confusing internally. IBIT was available for recycle via liquidated Defiance ETF. And it’s just as sober and Boomer-friendly as IBTC.”

Blackrock and several other spot bitcoin ETF issuers recently met with the SEC several times to discuss their applications, including the use of the cash creation model versus the in-kind model. Blackrock prefers to use the in-kind model and even proposed a revised in-kind model which it thought would resolve the SEC’s concerns. Balchunas shared on social media platform X on Monday:

Blackrock has gone cash only. That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in row bf holidays. Good sign.

What do you think about Blackrock adopting the cash creation model for its spot bitcoin ETF? Let us know in the comments section below.

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