KEY POINTS
- BlackRock revealed it is seeding its iShares Bitcoin ETF (IBIT) on January 3
- The asset nvestment giant named its authorized participants (AP) last Friday
- Balchunas noted that BlackRock could be “the first horse” at the “starting gate” with its latest S-1 filing
New York-based investment giant BlackRock could Be the “first horse” at the “starting gate” of Bitcoin exchange-traded fund (ETF) race, according to Eric Balchunas, the senior ETF analyst at Bloomberg Intelligence.
Balchunas comments came after BlackRock appointed Jane Street Capital and JP Morgan Securities as its two authorized participants (AP) for its proposed spot Bitcoin exchange-traded fund (ETF), namely iShares Bitcoin ETF.
The naming of APs, who will be involved in share creation and redemption was made via an amended S-1 registration filing on Friday, was made in the eleventh hour after multiple meetings with officials at the U.S. Securities and Exchange Commission (SEC).
The regulator is expected to announce its decision on spot Bitcoin ETF applications by Jan. 10, 2024 and Dec. 29 was the final date for asset managers to make changes to their spot Bitcoin ETF applications.
BlackRock said the APs will deliver only cash to create shares and will receive only cash when redeeming shares. Further, the APs will not directly or indirectly purchase, hold, deliver, or receive bitcoin as part of the creation or redemption process or otherwise direct the Trust or a third-party with respect to purchasing, holding, delivering, or receiving bitcoin as part of the creation or redemption process.
According to Eric Balchunas, the senior ETF analyst at Bloomberg Intelligence, the SEC has specific requirements for the hopeful Bitcoin ETF issuer. The issuer must clearly state in its prospectus that it will utilize the cash creation and redemption model, and identify the authorized participants that will be involved in the process.
With the latest development in BlackRock’s filing, Balchunas noted that the asset management giant could be “the first horse” at the “starting gate.”
The ETF analyst also clarified that names of authorized participants in S-1 are not yet due but “BlackRock adding them in there is a bit of a flex in that regard. So if we see other S-1s not naming AP doesn’t mean they don’t have one lined up. But this does make BlackRock the first horse officially ready imo [in my opinion].”
Balchunas also noted that naming the AP could be tricky because the SEC not only wants them identified in the documents but requires issuers to make the AP the underwriter of the spot Bitcoin ETF.
What makes this AP thing tricky – and could keep some from starting gate – is not only does SEC wants the AP named in docs but it wants them to be the underwriter of the ETF too, which may make them nervous re lawsuits/risk given how brand new the asset class is. I truly hope…
— Eric Balchunas (@EricBalchunas) December 29, 2023
“What makes this AP thing tricky – and could keep some from starting gate – is not only does SEC wants the AP named in docs but it wants them to be the underwriter of the ETF too, which may make them nervous re lawsuits/risk given how brand new the asset class is. I truly hope this get resolved, esp for small guys. Fingers crossed,” the ETF analyst added.
Last week, BlackRock advanced its iShares Bitcoin ETF (IBIT) by submitting an updated S-1 filing with the SEC, revealing its plan to seed its IBIT with $10 million on Jan. 3.
