Grayscale Updates Bitcoin ETF Submission, Adapting Cash Creation Strategy
In Brief
Grayscale has filed an updated S-3 document with the SEC, now reflecting the cash creation approach previously recommended by the US SEC.
A firm specializing in digital currency asset management Grayscale has presented another amended S-3 document to the United States Securities and Exchange Commission (SEC). The revisions in Grayscale's S-3 filing now align with the cash creation model proposed by the regulator.
The ongoing tensions between asset managers eager to launch a spot Bitcoin ETF and the SEC have revolved around choosing between cash versus in-kind creations.
Generally, ETFs tied to stocks and commodities employ an in-kind creation structure, enabling fund market participants to manage the assets directly. In contrast, a cash creation model for a spot Bitcoin ETF means that new shares can only be created or redeemed through cash transactions.
The SEC's recent decision to limit broker-dealers from directly transacting with Bitcoin is perceived as an attempt to improve tracking of Bitcoin transfers from exchanges, addressing risks tied to anti-money laundering measures or Know Your Customer (KYC) compliance.
Until recently, Grayscale was reluctant to concede ground on in-kind creations. This latest turn of events follows the exit of the CEO of Grayscale’s parent company, Digital Currency Group, Barry Silbert’s resignation from Grayscale’s governing board.
Companies Revise Spot Bitcoin ETF Submissions to Include Cash Redemption Options
Currently, approximately thirteen companies have filed for a spot Bitcoin ETF, pegged to the live market price of the digital currency.
In a recent turn of events, the multinational investment giant BlackRock revised modified its application for a spot Bitcoin ETF to also include the option for cash redemptions.
This revision is viewed as a tactical maneuver aimed at increasing the chances of securing approval from the SEC.
The company prioritized securing SEC endorsement for its Bitcoin ETF is highlighted as a significant corporate objective, referring to Bitcoin as a “global asset” and a “store of value” akin to gold.
The recent changes made by Grayscale and BlackRock in their Bitcoin ETF proposals illustrate how companies are adapting during the ongoing negotiations with the SEC, pointing to a growing enthusiasm among firms to introduce spot Bitcoin ETFs.
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