The company's offer now includes a mechanism for repayment of shares for fiat funds, which is a buyback model that the SEC considers safer for investors than repayment in BTC. BlackRock has updated its application for a bitcoin ETF in order to increase the likelihood of its approval by the U.S. Securities and Exchange Commission (SEC). Now the management company's proposal includes a mechanism for repayment of the fund's shares with fiat funds, which corresponds to the preferences of the American regulator.
The world's largest asset management company has become the latest of several firms to update their statements in connection with rumors about the possible approval of a number of bitcoin ETFs in January by the SEC. ARK Investments has also previously made similar changes to its application for the creation of the ARK 21SHARES Bitcoin ETF.
The significance of the spot bitcoin ETF is that various ETFs, including gold, have trillions of dollars worth of assets under management. The cryptocurrency community believes that even a small share of this capital can have an impact on the global cryptocurrency market. If spot bitcoin ETFs are approved, this may lead to an increase in demand for cryptocurrency, since when buying shares of funds, it is assumed that bitcoin will be supplied as the underlying asset, which may affect its exchange rate.
BlackRock applied to launch the iShares Bitcoin Trust exchange-traded fund in June this year, offering a repayment model in kind. However, the U.S. Securities and Exchange Commission has expressed concerns about investor safety and market manipulation by analyzing the proposal, according to CoinDesk.
Usually ETFs have one of two repayment and issuance mechanisms: natural or monetary. The in-kind repayment mechanism, which, according to many companies, is more attractive to investors, allows companies to redeem shares for bitcoins. However, the SEC believes that repayment for fiat funds is safer and more affordable.
In this case, if the investor decides to repay the fund's shares, BlackRock will have to extract bitcoins from the vault, sell them and pay the investor the necessary amount in fiat funds.
In the new application, BlackRock also indicated the ticker for the fund being created. It is assumed that the spot bitcoin ETF will be traded on NASDAQ under the name IBIT.
Companies such as Valkyrie, Fidelity Investments, ARK Investments, Grayscale, WisdomTree and Invesco are also awaiting approval from the SEC. Bitcoin ETF issuers have already advanced in negotiations with the SEC on key details. The regulator has set a deadline for making a decision on approving, rejecting or postponing applications for bitcoin ETFs in mid-January.
