SEC Holds Key Meeting with BlackRock and Nasdaq Over iShares Bitcoin Trust ETF Listing
- The SEC recently convened a critical meeting with representatives from BlackRock and Nasdaq to discuss the listing of the iShares Bitcoin Trust as a spot Bitcoin ETF.
- BlackRock presented two potential redemption models for the ETF, the “In-Kind Redemption Model” and the “In-Cash Redemption Model,” outlining the mechanics of operation.
On November 20, 2023, a pivotal meeting occurred between the United States Securities and Exchange Commission (SEC) representatives from BlackRock, Inc., and the Nasdaq Stock Market LLC. The primary agenda of this meeting was the consideration of the iShares Bitcoin Trust and its potential listing as a spot Bitcoin exchange-traded fund (ETF) on Nasdaq.
The meeting, hosted by the SEC’s Division of Trading and Markets, saw the participation of key personnel from the SEC, including David Shillman, Tom McGowan, Randall Roy, Ray Lombardo, Molly Kim, Edward Cho, Sarah Schandler, and Stacia Sowerby. BlackRock was represented by Rachel Aguirre, Adithya Attawar, Shannon Ghia, Robert Mitchnick, Charles Park, Marisa Rolland, and Ben Tecmire. The NASDAQ Stock Market LLC had Eun Ah Choi, Jonathan Cayne, Giang Bui, and Ali Doyle as their representatives.
BlackRock’s presentation to the SEC offered a comprehensive explanation of two potential models for the iShares Bitcoin Trust: the “In-Kind Redemption Model” and the “In-Cash Redemption Model.” These models delved into the intricate mechanics of how the ETF would function, focusing on the redemption process involving market makers, bitcoin custodians, and various exchanges.
The “In-Kind Redemption Model” outlined a process where the ETF issuer directs the Bitcoin Custodian to release Bitcoin to a market maker, who may then unwind the Bitcoin position. This model involves multiple parties, including a U.S. Registered Broker/Dealer, spot crypto exchanges, and a listing exchange.
In contrast, the “In-Cash Redemption Model” involves the ETF issuer trading with the market maker to sell bitcoin for USD. This model includes additional steps concerning the Bitcoin Custodian transferring cash out of cold storage and the market maker delivering shares to the Transfer Agent via an Authorized Participant.
SEC’s Response and Industry Implications
The SEC’s response to BlackRock’s presentation and proposed models remains uncertain, leaving the cryptocurrency community and financial markets in anticipation of the potential approval of a spot Bitcoin ETF. Such approval would represent a significant milestone in the mainstream acceptance of cryptocurrencies.
This meeting occurred within the context of ongoing SEC reviews of various proposals for spot crypto ETFs from multiple firms, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, Bitwise, and BlackRock. The journey toward a spot Bitcoin ETF has experienced delays and denials, creating a sense of both excitement and uncertainty in the crypto and financial sectors.
The SEC also held a meeting with Grayscale executives on the same day to discuss their proposal for a Bitcoin ETF. These meetings demonstrate the SEC’s active engagement in understanding and potentially integrating cryptocurrencies into regulated financial products.
BlackRock’s application to list a spot Bitcoin ETF on Nasdaq was initially filed in June 2023. The discussions surrounding Bitcoin ETFs have been fueled by a 2019 video of SEC Chair Gary Gensler criticizing the commission’s “inconsistent” approach to Bitcoin products. The approval of a spot Bitcoin ETF by the SEC would signify a landmark decision, potentially opening the doors for broader cryptocurrency acceptance and integration in the mainstream financial sector.
