Revising Filings for Compliance
BlackRock, ARK Invest, and WisdomTree, prominent applicants for a spot Bitcoin ETF, have altered their U.S. SEC filings to adhere to regulatory demands, moving towards the cash redemption model.
SEC-Driven Changes
The S-1 amendments, filed by BlackRock and Cathie Wood’s ARK Invest on Dec. 18, pertain to the cash creation and redemption model for their proposed spot Bitcoin ETFs. These updates signify a shift toward the cash redemption system, replacing in-kind redemptions, which involve non-monetary assets like BTC.
Cash Redemption System Embraced
ARK Invest’s ARK 21Shares Bitcoin ETF intends to allow solely cash creations and redemptions. While the potential for in-kind transactions remains, it’s contingent on regulatory approval, as mentioned in their registration statement.
BlackRock echoed a similar sentiment in its iShares Bitcoin Trust ETF S-1 amendment, emphasizing a potential for in-kind transactions, subject to regulatory nod, yet highlighting these will predominantly occur for cash.
SEC’s Stringent Directive
Analysts suggest that ARK and its ETF partner, 21Shares, had pursued creative methods to circumvent cash creations, signaling SEC’s rigid stance. The SEC’s insistence on a “cash-only” requirement means authorized participants acquire additional ETF shares solely through cash contributions.
WisdomTree’s In-Kind Stand
Contrasting the trend, WisdomTree’s S-1 amendment for the WisdomTree Bitcoin ETF maintains the in-kind creation and redemption option. The filing outlines the possibility for authorized participants to exchange baskets for Bitcoin or cash.
Compliance to Cash Norms
Legal experts anticipated this shift, foreseeing a shift towards the cash model for ETFs. Previously, Invesco and Galaxy also embraced the “cash-only” model in their S-1 registration statements, aligning with the SEC’s directive.
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