The Meeting of the United States Securities and Exchange Commission
On November 20, 2023, a significant meeting took place between the United States Securities and Exchange Commission (SEC) and representatives from BlackRock, Inc., and the Nasdaq Stock Market LLC. The meeting was primarily focused on discussing the iShares bitcoin Trust and its potential listing on Nasdaq as a spot bitcoin exchange-traded fund (ETF).
Key Personnel in Attendance
The meeting was hosted by the SEC’s Division of Trading and Markets and was attended by key personnel from the SEC, BlackRock, and The NASDAQ Stock Market LLC.
Models Presented by BlackRock
BlackRock presented two potential models for the iShares bitcoin Trust: the “In-Kind Redemption Model” and the “In-Cash Redemption Model.” These models detailed how the ETF could operate, focusing on the redemption process involving market makers, bitcoin custodians, and various exchanges.
The In-Kind Redemption Model
This model involves a multi-step process where the ETF issuer instructs the bitcoin Custodian to release bitcoin to a market maker, who may then unwind the bitcoin position. The process also involves various parties, including a U.S. Registered Broker/Dealer, spot crypto exchanges, and a listing exchange.
The In-Cash Redemption Model
This model involves the ETF issuer trading with the market maker to sell bitcoin for USD. It includes additional steps involving the bitcoin Custodian moving cash out of cold storage and the market maker delivering shares to the Transfer Agent via an Authorized Participant.
Response from the SEC
The SEC’s response to BlackRock’s presentation and proposed models remains uncertain. There is currently no information on whether the SEC plans to approve the listing of a spot bitcoin ETF. The approval of such an ETF would represent a significant milestone in the acceptance of cryptocurrency in mainstream financial markets.
Ongoing Reviews and Meetings
This meeting is part of ongoing reviews by the SEC of various proposals for spot crypto ETFs from several firms, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, and Bitwise, alongside BlackRock. The SEC has also met with Grayscale executives on the same day to discuss their proposal for a bitcoin ETF. These meetings and reviews indicate the SEC’s active engagement in understanding and potentially integrating cryptocurrencies into regulated financial products.
Application for Listing
BlackRock’s application to list a spot bitcoin ETF on the Nasdaq was initially filed in June 2023. The discussion around bitcoin ETFs has been fueled by a 2019 video of SEC Chair Gary Gensler, where he criticized the commission’s “inconsistent” approach to bitcoin products. The approval of a spot bitcoin ETF by the SEC would be a landmark decision, potentially paving the way for wider acceptance and integration of cryptocurrencies in the mainstream financial sector.
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### News source: blockchain.news