Ark Invest and 21Shares have updated their spot Bitcoin ETF applications to now align with the SEC’s cash creation proposal
ARK Invest and 21Shares have filed an S-1 amendment for their spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC). From the filing, the companies appear to have agreed to the agency’s “cash creation” redemption mechanism for the proposed product.
SEC Strongly Supports Cash, Creates Model for Bitcoin ETF
According to a post shared by Bloomberg ETF analyst James Seyffart, ARK 21Shares filed an amended copy of its Form S-1 on December 18, 2023. Judging from the contents of the filing, ARK 21Shares appears to have succumbed to the cash creation and redemption model that the SEC has been trying to promote to all spot Bitcoin ETF applicants.
Last month, the SEC reportedly met with top investment asset manager BlackRock. Their conversation centered around the selection of a cash creation model summary or “in-kind” redemption model for upcoming ETF offerings. The SEC recommended that BlackRock and other potential spot BTC ETF candidates adopt a cash creation model for redemptions of ETF products.
So far, both BlackRock and Fidelity have emphasized the physical model as their redemption mechanism of choice. ARK 21Shares, on the other hand, seems to prefer cash creation, as the SEC suggests. According to the latest filing, the decision to choose cash creation as its redemption model could be another strategy by ARK 21Shares to secure a spot in the “front row” of those who apply for a Bitcoin ETF that may be considered first by the SEC.
Ark Investment and Approval Period
The deadline for the U.S. Securities and Exchange Commission (SEC) to make a decision on the ARK 21Shares Bitcoin ETF filing is getting closer, and the Florida-based asset management company is very confident that it will receive a positive response from the regulator. Specifically, the approval deadline for the SEC to make a decision on the ARK 21Shares Bitcoin ETF remains January 10, 2024.
ARK 21Shares had argued that its application would be considered first ahead of other applications given the hierarchy of submissions.
Meanwhile, industry experts and ETF analysts explained that the SEC may not be interested in giving any applicant a first-mover advantage. ARK 21Shares was not bothered by this information as it has already moved ahead with the third amendment to its Bitcoin ETF filing.
Spot Bitcoin ETF Filings: Blackrock, WisdomTree Amend Form S-1
Investment management firm BlackRock filed an amendment to its Form S-1 for the iShares Bitcoin Trust on Monday, December 18, 2023, as part of its filing for a spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC).
Cash Redemption vs Physical Bitcoin ETF Model
The deadlock in the spot Bitcoin ETF approval seems to be centered on the redemption model behind the ETF operation. To this end, BlackRock has amended its S-1 form in its latest filing. In the filing, the investment manager did not confirm the “physical” redemption component while confirming the cash redemption system for SEC approval. It said,
“These transactions will be in exchange for cash. Subject to physical regulatory approval, these transactions can also be conducted in Bitcoin.”
It remains to be seen whether the U.S. SEC will ultimately approve the cash redemption model, before or after the Bitcoin ETF is officially approved.
