Investment manager Blackrock had on Monday, December 18, 2023 submitted an amendment to the form S-1 for its iShares Bitcoin Trust as part of its spot Bitcoin ETF filing with the U.S. Securities and Exchange Commission (SEC).
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Cash Redemption Vs In-Kind Bitcoin ETF Model
It appears that the deadlock around spot Bitcoin ETF approval is centered around the redemption model behind operations for the ETFs. In this direction, Blackrock amended its form S-1 in its latest filing. In the filing, the investment manager left the “in-kind” redemptions part unconfirmed for approval by the SEC while confirming the cash redemption system. It said,
“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.”
It remains to be seen if the US SEC would eventually approve the cash redemption model, before or after the formal approval of the Bitcoin ETF. The Commission faces the next deadline before January 10, 2024 for approval of the spot Bitcoin ETF filings. Although the SEC is expected to approve all the spot ETFs at once, it is also likely it would give the green light to the companies in a few batches. However, it could give a singular date permitting the firms to launch the spot ETFs.
WisdomTree Bitcoin ETF
In its filing for S-1 amendment to the spot Bitcoin ETF, WisdomTree appears to have left it open the flexibility to still do in-kind creation and redemption. It has mentioned that the ETF baskets would only be issued or redeemed in exchange for an amount of Bitcoin or cash. “No Shares are issued unless unless the Bitcoin Custodian or Prime broker has allocated to the Trust’s account the corresponding amount of Bitcoin or cash.”
Earlier, CoinGape reported Grayscale Investments’ stance around ETF redemptions and the related tax implications for its Grayscale Bitcoin Trust (GBTC) shareholders. The company said spot commodity ETFs are structured to be grantor trusts and hence capital gains tax will not be applicable.
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