BlackRock, Fidelity Discuss Spot Bitcoin ETF With SEC

The firms, among others, are hashing out the details of the funds.

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Finance Reporter
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Reviewed by: Mark Nacinovich
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Edited by: Lou Carlozo

BlackRock Inc. and Fidelity Investments are among prospective spot bitcoin ETF issuers that have met with SEC representatives as recently as Monday to discuss the next steps on their spot bitcoin ETF filings, according to memo records filed with the agency. 

Grayscale Investments and Franklin Templeton have also met with the Securities and Exchange Commission in the past week. BlackRock reps spoke with the SEC on Monday.

The divisions of Trading and Markets as well as Corporate Finance have been involved, according to memos. These represent the two branches that need to approve an ETF. Bitwise Asset Management, ARK Invest and Valkyrie have also communicated with the SEC. 

Matt Hougan, chief investment officer of Bitwise, said in an interview with etf.com that discussions with the agency are “narrowing down and getting to specifics.” 

Anticipation is rising for potential approval of a spot bitcoin fund that would track physically backed bitcoin. While the SEC allows cryptocurrency ETFs that expose investors to futures contracts, they have rejected spot crypto ETFs on the grounds of potential market manipulation and investor protection.  

Spot Bitcoin ETF Details 

The SEC and the firms are ironing out the details of a spot bitcoin ETF structure as the Jan. 10 deadline on a decision on ARK's application approaches. The memos have pointed to discussions about redemption models to fund the exchange-traded fund. While many issuers are pushing for an in-kind redemption model, which is what most stock ETFs use, the SEC may prefer cash.  

On Nov. 28, BlackRock presented its revised in-kind redemption model to the agency.

“During our 11/20 meeting with Trading & Markets staff, we understood the SEC has certain unresolved questions around the in-kind model relating to balance sheet impacts and risks,” BlackRock wrote.  

“The in-kind creation and redemption model is a beautiful model of efficiency, from a cost perspective, from a tracking perspective and from a tax perspective,” Hougan told etf.com. “It is better, from that perspective than a cash create model, but if all we can get as a cash grade model, then that'll be great, as well.,”  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.