Amended filings from Invesco, Bitwise, and Valkyrie and Grayscale support in-cash ETF share redemptions<\/p>\n
Some prospective spot Bitcoin ETF issuers are kowtowing to the will of the U.S. Securities and Exchange Commission by abandoning immediate plans for \u201cin-kind\u201d share redemptions.<\/p>\n
Updated SEC filings from Valkyrie and Invesco and Galaxy Digital both state the creation and redemption of shares will initially be executed in-cash. This means investors offloading ETF shares would receive fiat currency after the underlying Bitcoin represented by their shares is sold.<\/p>\n
By contrast, \u201cin-kind\u201d redemption would allow investors to redeem their ETF shares for the underlying Bitcoin, offering tax, spread, and other efficiency benefits over in-cash redemptions.<\/p>\n
However, the amended filings state that Valkyrie and Invesco hope to facilitate in-kind redemptions in the future.<\/p>\n
\u201cCreation orders may be denominated and settled in cash or, subject to in-kind regulatory approval, in an amount of Bitcoin,\u201d Valkyrie said<\/a> in its latest filing.<\/p>\n \u201cIn the future, the Trust may permit or require creation and redemption transactions to take place in-kind,\u201d said<\/a> Invesco.<\/p>\n The updated applications come after several meetings<\/a> between the U.S. Securities and Exchange Commission (SEC) and prospective spot Bitcoin ETF issuers in recent weeks<\/a>.<\/p>\n While BlackRock, widely touted as the front-running spot Bitcoin ETF applicant and the world\u2019s largest asset manager, has expressed a preference for in-kind redemption, researchers are interpreting the updated filings from Valkyrie and Invesco as indicating the SEC remains steadfast in its preference for in-cash delivery.<\/p>\n \u201cInvesco is committing to cash creates only\u2026 pretty big clue that SEC is dug in on only letting cash-create ETFs out in first run,\u201d tweeted<\/a> Eric Balchunas, a senior ETF analyst at Bloomberg. \u201cAssuming it\u2019s cash or wait (which is pretty good assumption at this point) the big [question] is does BlackRock bend the knee too?\u201d<\/p>\n \u201cValkyrie going cash model now as well,\u201d said<\/a> Scott Johnsson, a finance lawyer and associate at Davis Polk & Wardwell LLP. \u201c[Either] they don\u2019t know where SEC lands\u2026 and so they\u2019re updating to cash with flexibility to move to in-kind [or] they know the SEC is standing firm here and so this is just a reflection of that reality.\u201d<\/p>\n Start for free<\/a><\/div>\n \u201cI think everyone is gonna have to bend the knee to cash creates and redeems,\u201d commented<\/a> James Seyffart, a Bloomberg analyst. Seyffart added that Bitwise updated its application to support in-cash redemptions from Dec. 4.<\/p>\n On Dec. 14, SEC chairman, Gary Gensler, made comments suggesting his agency may be open to approving a spot Bitcoin ETF soon.<\/p>\n \u201cWe had in the past denied a number of these applications, but the courts here in DC in on that,\u201d Gensler said<\/a>. \u201cWe\u2019re taking a new look at this based upon those court rulings.\u201d<\/p>\n Gensler\u2019s comments referred to the U.S. Court of Appeals overturning<\/a> the SEC\u2019s rejection of Grayscale\u2019s bid to convert its Bitcoin Trust into an ETF. The SEC chose not to appeal the ruling in October.<\/p>\n Seyffart and Balchunas have long tipped<\/a> that the SEC will approve an initial batch of spot Bitcoin ETFs around Jan. 10, 2024.<\/p>\n While the existing applications for spot BTC exchange-traded funds propose offering direct exposure to BTC, First Trust filed<\/a> for a Bitcoin \u201cBuffer ETF\u201d on Dec. 14. The proposed product would offer partial protection against downside movements in Bitcoin\u2019s price while capping potential profits.<\/p>\n On Dec. 13, the SEC delayed its deadline<\/a> to deliver a verdict on a spot Ether ETF proposed by Invesco and Galaxy Digital until Feb. 6. The SEC said it needs more time to assess the application.<\/p>\n On Dec. 5, the SEC also delayed BlackRock\u2019s Ether ETF application until late January.<\/p>\nETF applicants update filings after SEC meetings<\/h2>\n
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SEC warms to spot Bitcoin ETFs?<\/h2>\n
SEC delays Ether ETF deadline<\/h2>\n