The Securities and Exchange Commission (SEC) met with BlackRock Inc. on Monday to discuss the proposed rule to allow a spot Bitcoin exchange-traded fund (ETF). The SEC’s trading and markets division also met with Grayscale Investments, the leading crypto asset manager, regarding its application.
The SEC released a memo indicating that they met with BlackRock and Nasdaq Stock Market employees. “The discussion concerned the NASDAQ Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust under NASDAQ Rule 5711(d),” the memo states.
BlackRock also included a short presentation outlining two separate models for the ETF. The presentation describes how both an in-kind and in-cash redemption model could work to support the ETF. These smaller details may not impact retail investors, but they are still important to iron out before a final decision is made.
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The only currently available Bitcoin ETFs use futures contracts to closely track the price of Bitcoin. While this can provide general exposure, there can be price discrepancies and the management fees are high. A spot Bitcoin ETF would likely be a better alternative and attract investors.
It is unclear whether the SEC responded positively to the presentations and meetings. There is still plenty of time before a final determination must be made, and the SEC will likely take a while to sort through the details of each application before making a final decision. Many experts anticipate a final decision will be made by early 2024. Specifically, JPMorgan is eyeing Jan. 10 as this is the final day for a decision on several applications.
Bloomberg Intelligence ETF analyst James Seyffart wrote in a post on X that several other firms have reportedly met with the SEC in the past week. A dozen or so firms have submitted applications for a spot Bitcoin ETF, such as BlackRock, Grayscale, Fidelity Investments, WisdomTree Inc., Ark Invest and 21Shares. Most of the applications were filed in June, with several amendments submitted in the past few months.
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