BlackRock and Nasdaq discuss Bitcoin ETF terms with SEC in second meeting

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A second meeting between BlackRock, Nasdaq, and the Securities and Exchange Commission (SEC) was held yesterday to discuss the terms of approval for a Bitcoin exchange-traded fund (ETF).

SEC met with Blackrock about the Bitcoin ETF filing once again today.

This thing is a done deal. pic.twitter.com/El8ZEdENvo

— Will (@WClementeIII) December 19, 2023

According to the memo released by the Commission, the agenda for this recent meeting concerns necessary changes to rules for enabling the listing and trading of BlackRock’s proposed iShares Bitcoin Trust on Nasdaq’s exchange.

“The discussion concerned The NASDAQ Stock Market LLC’s proposed rule change to list and trade shares of the iShares Bitcoin Trust under Nasdaq Rule 5711(d),” as stated in the memo.

Nasdaq Rule 5711(d) outlines the criteria and regulatory standards that must be met to enable the listing and continued trading of commodity-based trust shares on the Nasdaq stock exchange.

Once approved and launched, the spot crypto ETF will track the market price of Bitcoin. This means that investors in the ETF would allow US investors to get Bitcoin exposure through normal brokerage accounts without having to custody BTC themselves. The spot crypto ETF would then hold the paired cryptocurrency as its underlying asset.

It is important to note, however, that the SEC maintains its position that Bitcoin is not a security, given how it does not pass the Howey test. An Ethereum ETF is also underway, but the SEC has moved its timeline for deciding on this application to Q3 2024.

This week, BlackRock updated specifications in its S-1 filing for the Bitcoin ETF’s creation and redemption model, which now includes cash redemptions to more closely align with SEC preferences.

The essential requirements involve stringent listing criteria, surveillance mechanisms, and compliance procedures for protecting market integrity. A critical component is the implementation of surveillance-sharing agreements between exchanges and markets trading in Bitcoin to mitigate concerns about potential manipulation.

BlackRock is one of 14 Bitcoin ETF applicants currently awaiting approval from the SEC. The asset manager giant faces competition from the likes of Fidelity, Ark Invest, and VanEck, who have also filed with hopes of SEC approval to bring Bitcoin ETFs to market.

Michael Saylor, CEO of MicroStrategy, a company that ranks as one of the biggest holders of Bitcoin on its books, appeared on Bloomberg TV earlier this week, suggesting that a Bitcoin ETF could be the “biggest development on Wall Street in 30 years.”

Asked how his company would react once the ETFs are approved, Saylor responded with the following statement:

“The ETFs are unlevered and they charge a fee. We provide you leverage, but we don’t charge a fee […] We offer a high-performance vehicle for people that are Bitcoin long investors.”

As of November 30, 2023, MicroStrategy holds approximately $6.5 billion worth of Bitcoin on its balance sheet. MicroStrategy’s share price has surged 300% so far this year, significantly outpacing Bitcoin’s own 150% rally in 2023.

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