Yesterday saw an important meeting between Nasdaq and the US Securities and Exchange Commission (SEC). The purpose of the meeting? To discuss Bitcoin cash ETFs, a hot topic in the world of finance and cryptocurrency. Nasdaq had already submitted its 19b-4 application for BlackRock’s iShares Bitcoin Trust in the summer, marking a significant step forward in Bitcoin ETFs.
Anticipation and implications
Anticipation for a cash-based Bitcoin ETF in the US is high, not least because an SEC decision is expected on one of the applications, the ARK 21Shares Bitcoin ETF, on 10 January. The details of the model for creating and redeeming ETFs, either in cash or in kind, are at the heart of the discussions.
Meetings have been held between SEC staff, exchanges wishing to list these products (NYSE, Nasdaq, Cboe Global Markets) and potential issuers. Bloomberg analysts see these meetings as a sign that approval is imminent.
Impact on the Bitcoin Market
Curiously, the price of Bitcoin fell to $42,000 on Wednesday, having hit a 21-month high of $45,500 the previous day. The fall was attributed by some to a Matrixport article suggesting that Bitcoin ETFs would be rejected by the SEC, blocking an influx of institutional capital.
What about Creations in Cash and in Kind?
A key point in these discussions concerns the model for creating ETFs, in cash or in kind. BlackRock and Grayscale have argued before the SEC in favour of allowing in-kind creation, arguing that this would offer more protection to investors and track the underlying assets more closely.
The SEC’s decision, expected on 10 January, could mark a turning point in the history of Bitcoin ETFs and have a significant impact on the cryptocurrency market. The implications of approval or rejection are vast, both for institutional investors and for the Bitcoin market in general.
