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BlackRock Modifies

BlackRock Modifies ETF Filing With SEC & Pando Enters the Game

As more firms throw their hats into the race for the first Bitcoin spot exchange-traded fund (ETF) approval in the U.S., recent filings show how applicants are revising models to align with SEC feedback. BlackRock is the latest firm to overhaul its proposed Bitcoin ETF structure.


Key Points:

  • BlackRock modified its proposed Bitcoin spot ETF application to address SEC concerns around broker-dealer regulations and balance sheet risks
  • The changes involve an offshore platform prepaying the registered broker-dealer in cash before receiving bitcoin from Coinbase custody
  • Swiss asset manager Pando Asset entered the Bitcoin spot ETF race, filing an application with the SEC using Coinbase custody
  • Bloomberg predicts the SEC could approve all spot Bitcoin ETF applications at once on January 10th
  • The SEC met with BlackRock recently to provide feedback that prompted the revisions to its application

Following a November 28th meeting with the SEC’s Division of Trading and Markets, BlackRock introduced a “prepaid model” to mitigate issues around balance sheet risks and broker-dealer regulations. The new framework requires an offshore platform to prepay cash to a registered broker-dealer before receiving bitcoin from Coinbase custody.

Looks like BlackRock met with the SEC’s Trading & Markets division again yesterday and gave presented them with a “revised” in-kind model design based on Staff’s comments at their 11/20 meeting.. h/t @btcNLNico here’s full doc: https://t.co/sgOpY5D1jz pic.twitter.com/863pWOX6w0

— Eric Balchunas (@EricBalchunas) November 29, 2023

BlackRock contends this separation of entities reduces financial and regulatory pressure on broker-dealers. It also believes maintaining an in-kind redemption structure offers benefits like lower costs and fewer manipulation risks.

The same day as BlackRock’s meeting, Swiss asset manager Pando Asset entered the Bitcoin ETF race. Its proposed Pando Asset Spot Bitcoin Trust would also utilize Coinbase custody and aims to track bitcoin price movements. Some analysts question why the application comes so late, with Bloomberg’s James Seyffart predicting the SEC could green light all Bitcoin ETF filings simultaneously on January 10th.

Nonetheless, the flurry of activity shows how the SEC’s feedback is steering proposals. Rules around broker-dealer involvement present a formidable hurdle, but applicants’ willingness to tailor models highlights how the approval of a Bitcoin spot ETF may be inevitable – it just may not look like what many originally envisioned.

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