BlackRock amends spot Bitcoin ETF proposal by introducing cash redemptions

Move expected to help asset management company obtain approval from SEC

BlackRock building in New York. Reuters

The world's biggest asset manager BlackRock has filed a revised spot Bitcoin exchange-traded fund proposal to enable smooth cash redemptions, a step that might help the company obtain approval from the US Securities and Exchange Commission.

“The trust issues and redeems baskets on a continuous basis,” BlackRock’s iShares Bitcoin Trust said in a regulatory filing. "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.

“Baskets are only issued or redeemed in exchange for an amount of cash determined by the trustee on each day that Nasdaq is open for regular trading. No shares are issued unless the Bitcoin custodian or prime execution agent has allocated to the trust’s account the corresponding amount of Bitcoin.”

In June, BlackRock filed for a spot Bitcoin ETF that would allow investors exposure to the cryptocurrency. If the SEC approves the application, the fund would trade on the Nasdaq stock market, making it the first publicly traded spot Bitcoin ETF in the US.

However, the regulator, which has seen a wave of applications filed by asset managers to establish spot Bitcoin ETF, said these filings are not clear and detailed.

SEC has reportedly passed on the apparent irregularities to exchanges Nasdaq and Cboe Global Markets, which filed the applications on behalf of asset managers such as BlackRock and Fidelity Investments, The Wall Street Journal reported in June, citing sources.

BlackRock’s move comes after the global cryptocurrency industry being caught in the crosshairs of the US securities regulator over alleged breaches of securities laws.

Last month, Binance founder and chief executive Changpeng Zhao was accused of criminal charges as he resigned from his position as part of a $4.3 billion settlement with the US Department of Justice.

In the same month, Sam Bankman-Fried, the 31-year-old founder of the failed cryptocurrency brokerage FTX, was convicted of stealing at least $10 billion from customers and investors.

An ETF is a type of pooled investment security that operates much like a mutual fund.

Bitcoin price has surged more than 60 per cent since mid-June when BlackRock filed paperwork with the SEC for a spot Bitcoin ETF. Reuters

Typically, ETFs will track a particular index, sector, commodity or other assets but unlike mutual funds ETFs can be bought or sold on a stock exchange the same way that a regular stock can.

The Bitcoin price has surged more than 60 per cent since mid-June when BlackRock filed paperwork with the SEC for a spot Bitcoin ETF.

Bitcoin was trading 0.10 per cent down at $42,605.90 at 6.45pm UAE time on Tuesday.

In April, the world’s biggest digital currency climbed above the key $30,000 mark for the first time since June last year but is still down more than 59 per cent from its record high of more than $68,000 in November 2021.