The U.S. Securities and Exchange Commission (SEC) has begun reviewing a proposal from BlackRock for a Bitcoin ETF.
Bitcoin ETF Approval Process
The approval process for the Spot Bitcoin ETF has faced significant hurdles, particularly under Gary Gensler's leadership at the SEC. All issuers, including BlackRock, were required to remove specific features from their ETF filings. Recently, under the new SEC administration, the organization has made strides to evaluate these requests, confirming its pro-crypto stance, though a final decision has yet to be made.
BlackRock's New Application
BlackRock sought the approval for in-kind transfers in the share creation and redemption processes for the iShares Bitcoin Trust. This feature was previously removed from the filing due to SEC objections last year. BlackRock recently filed a new request with the SEC to enable in-kind transfers, which the SEC has accepted for review. If approved, this change would allow transactions with Bitcoin similar to cash transactions.
Market Impact
Currently, Authorized Participants can create shares by providing cash to the Trust or redeem shares for cash. Upon approval, they will also be able to perform these actions using Bitcoin, effectively bypassing the conversion to cash. BTC transfers will be executed through Coinbase Custody. This development is significant as it allows investors to trade directly with BTC, potentially increasing the fund's liquidity. Additionally, the costs associated with the ETF will decrease as payments can be made in BTC. The SEC has accepted the proposal for review and is now gathering public comments. A decision on the application is expected within 45 to 90 days.
BlackRock's advancement in the field of Bitcoin ETFs could significantly impact the market by increasing liquidity and reducing costs. The SEC's final decision will be pivotal for the cryptocurrency sector in the coming months.
