SEC Finds 'No Grounds' to Deny Conversion of Bitcoin ETF, Grayscale Says

SEC Postpones Spot Bitcoin ETF Decision for All Applicants, Including BlackRock and Fidelity

SEC Delays Decision on Cathie Wood's Ark 21Shares Bitcoin ETF Application

The terminology surrounding Exchange Traded Funds (ETFs) can occasionally be challenging, and BlackRock, a leading fund management company, has sparked inquiries with its request for a Bitcoin ETF.

BlackRock's (BLK) iShares unit recently submitted an application to the U.S. Securities and Exchange Commission (SEC) seeking approval for the establishment of the iShares Bitcoin Trust.

The naming and specific details of the proposal caused some uncertainty among industry experts, questioning whether BlackRock's application was for an ETF or a trust resembling the characteristics of the Grayscale Bitcoin Trust (GBTC).

The answer is both.

“It’s a reminder of just how complex ETF terminology is,” Noelle Acheson, editor of Crypto is Macro Now, said. “Technically, BlackRock's proposal is for a trust, but it's a trust that allows redemptions, so it functions just like an ETF.”

In this sense, Acheson noted, the iShares product is nothing like GBTC, which has no redemption mechanism. “The market hears ‘trust’ and thinks it will be like GBTC with no redemptions, but that's not the case here,” Acheson said.

The key distinction is that an ETF for spot bitcoin “would be able to buy bitcoin at the end of the trading day to bring the fund's assets in line with its trading price. A trust does not have the ability to do this,” Joe Consorti, market analyst at The Bitcoin Layer said.

A trust can experience occasional fluctuations in trading prices, either higher or lower than the value of its underlying assets. This situation is currently affecting GBTC, which has been consistently trading at a significant discount (currently around 40%) compared to its net asset value for several years.

Grayscale has been making efforts to convert its trust into a spot bitcoin ETF for a while now. However, the Securities and Exchange Commission (SEC) has consistently rejected their attempts, expressing concerns about market manipulation and other related issues.

BlackRock aims to overcome allegations of market manipulation, as reported by CoinDesk earlier on Friday, by including a commitment to establish a "surveillance-sharing agreement" between exchanges in their application.

Source Coindesk