Spot Bitcoin ETF Talks - BlackRock & Grayscale Meet With SEC

23 Nov 2023 by Rory Kejzerko 3 min read

In an ongoing development that appears to be two step forwards one step back (so still bullish), representatives from the US Securities and Exchange Commission (SEC) have met with two of the biggest in-waiting institutional Spot Bitcoin ETF applicants.

Alongside representatives from the Nasdaq, BlackRock - which is the world’s apex private corporate entity with almost 8.6 trillion assets under management (AUM) - met with the SEC to discuss the highly-anticipated approval of its Spot Bitcoin ETF application.

More specifically, the asset manager spoke with those from the SEC’s division of trading and markets, as such entities are who possess approval power over the spotlighted applications.

Here, BlackRock reportedly provided a presentation regarding how in-kind and in-cash redemption models fared against each other when it comes to transferring customer investments into its iShares Bitcoin Trust.

For context, an in-kind Spot Bitcoin ETF model would involve existing BlackRock investments and cash being moved over as they already are, meaning nothing will be sold. Alternatively, an in-cash system would entail BlackRock client assets being sold, with cash proceeds then being made into Spot Bitcoin ETF investments.

Per what’s been leaked to onlookers, it appears that the former - sleeker - method has the upper hand when it comes to BlackRock’s preferred route of operations - however disappointingly, it’s still unclear as to how the Gary Gensler-led regulator has responded to the clarity-providing presentation.

The Grayscale x SEC Spot Bitcoin ETF Meeting

As you probably already know, BlackRock isn’t alone in its Spot Bitcoin ETF application, as fellow mammoth asset managers Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, Bitwise, and Grayscale all have similar intentions.

In fact, Grayscale has recently undertaken a similar means of gaining SEC favourability, as in the days preceding BlackRock’s trip to the regulator, executives from the world’s leading crypto asset manager made the same journey.

Per a SEC-disclosed memo, Grayscale CEO Michael Sonnenshein, legal chief Craig Salm, ETF head Dave LaValle, and four other executives - along with five Davis Polk law firm representatives - met with the SEC’s division of trading and markets on November 20th.

In similar Spot Bitcoin ETF application discussions, the document outlines how Grayscale has entered a transfer agency and service agreement with BNY Mellon, an American investment bank that’s pledged to manage its Grayscale Bitcoin Trust (GBTC) through facilitating the issuance and redemption of shares, as well as maintaining shareholder accounts.

Although bullish on surface, many onlookers simply perceive such corporate agreement as a somewhat necessity before a GBTC can be approved, therefore meaning it isn’t indicative of a conversion being closer to happening.

That being said, the Bloomberg-pushed narrative of a Spot Bitcoin ETF approval taking place at the start of next year still hasn’t been shaken, with many attributing a 90% chance of crypto’s landmark Spot Bitcoin ETFs arriving before January 10th 2024.

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