Two prominent asset managers, Bitwise and BlackRock, have recently submitted updated filings to securities regulators in their pursuit of launching a spot Bitcoin exchange-traded fund (ETF). This development marks a significant step forward in the race to introduce a Bitcoin ETF to the market. As of now, there are at least ten asset managers that have expressed their intention to offer a spot Bitcoin ETF, indicating the growing demand for such investment vehicles.
These updated filings come on the heels of recent discussions between the ETF applicants and the U.S. Securities and Exchange Commission (SEC). It is expected that the filings will address the concerns raised during these conversations. By ensuring that their filings align with the SEC’s requirements and address any potential issues, the asset managers hope to increase their chances of securing approval for their respective Bitcoin ETFs.
Bloomberg ETF analyst, Eric Balchunas, believes that the probability of the SEC approving one or more spot Bitcoin ETFs by January 10, 2024, stands at an optimistic 90%. While the SEC has previously given the green light to Bitcoin and Ethereum futures ETFs, it has yet to approve a spot Bitcoin ETF. This fact highlights the importance and potential significance of the current filings and the possible arrival of a spot Bitcoin ETF in the U.S. market.
One prevailing question in the ETF community is whether the SEC will allow in-kind creations for spot Bitcoin ETFs. In-kind creations would enable participants to transact with actual Bitcoin, while cash creations would restrict transactions to fiat currency. Rumors suggest that the initial grouping of spot Bitcoin ETFs might only allow cash creations, with the potential for in-kind creations further down the line.
While this distinction between cash and in-kind creations may seem trivial, it holds significant implications for market participants. Current regulations and operational constraints may make it challenging for brokers to facilitate transactions involving Bitcoin. If the SEC permits in-kind creations, it would pave the way for more efficient and seamless ETF transactions, enabling investors to gain exposure to Bitcoin directly.
BlackRock, in its latest filing, has indicated a specific focus on the cash and in-kind creation models. This attention to detail suggests that the company’s amendments strive to address potential concerns raised during discussions with the SEC. By fine-tuning their creation models, BlackRock aims to present a robust and well-rounded proposal for their iShares Bitcoin Trust ETF.
With Bitwise and BlackRock taking proactive steps to enhance their filings, it is expected that other asset managers will follow suit in the coming days. The race to introduce a spot Bitcoin ETF is becoming increasingly competitive, with each filing carrying the potential to shape the market landscape.
Investors and market participants eagerly await the SEC’s decision on spot Bitcoin ETFs. If approved, these ETFs could represent a significant milestone in the adoption of cryptocurrencies within the traditional financial system. As the discussions continue and the filings evolve, all eyes remain fixed on the outcome, as it holds the promise of opening up new avenues for Bitcoin investment.
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