BlackRock and the U.S. Securities and Exchange Commission met this week to discuss potential changes to product workflows trading on crypto exchanges, including the transition to digital asset fund redemption.
With the SEC’s newly established cryptographic task force held on Monday, April 1, the Closing Conference focuses on the structure and dynamics of cryptographic ETFs.
It is understood that BlackRock’s team is having a deeper discussion of the possibility of redemption of the physical form, a model the company has already submitted to its spot Bitcoin ETF.
Redemption of physical items allows certified participants to directly exchange ETF shares with underlying assets such as Bitcoin, rather than cash, improving efficiency and reducing costs. The meeting shows that such redemptions may have gained regulatory traction.
The conversation has seen an increase in BlackRock’s crypto exposure, with over 574,000 BTCs being IBIT funds and more than 1.1 million ETHs being held in Ether ETFs.
Senior representatives of BlackRock’s regulations, products, and ETF teams participated in discussions on adapting existing ETP workflows to support in-kind systems.
Since approving the Spot Bitcoin ETF in January 2024, the SEC has mandated a cash-only reimbursement model, citing custody and compliance risks.
NASDAQ’s submission to BlackRock’s physical redemption model states that such a structure will align cryptographic ETFs more closely with traditional commodity-based ETFs.
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