2023-11-26 13:43:27
There is good news regarding the application for Bitcoin spot ETF. The U.S. Securities and Exchange Commission (SEC) met with Grayscale and BlackRock, the world’s largest asset management company, on the 20th to discuss details such as the listing of Bitcoin spot ETF. , the SEC also announced a memorandum on negotiating the listing of BTC spot ETFs with these two global asset giants. This may mean that the relevant application is expected to be approved.
(Previous summary: GBTC negative premium reached a historical low of -8%! Bloomberg ETF analyst: smallest gap since July 2021)
(Background supplement: What exactly is the Bitcoin spot ETF dragging? Bloomberg analyst: The core problem is this)
After Grayscale won the legal battle with the U.S. Securities and Exchange Commission (SEC), the court requested that the SEC should review Grayscale’s application to convert GBTC into a Bitcoin spot ETF, according to the SEC’s official websitememorandumIt shows that the SEC met with Grayscale on the 20th to discuss the proposed rule changes for listing and trading of this application.
At the same time, in June this yearsubmitBlackRock of Bitcoin Spot ETF also received good news, another SEC memorandumIt shows that the SEC met with BlackRock on the 20th to discuss proposed rule changes for the listing and trading of BlackRock’s iShares Bitcoin Trust ETF.
Zhao Wei, senior researcher at OKX Research Instituteexpressas BlackRock and Grayscale meet with the SEC to discuss more details related to Bitcoin ETF, the market is generally optimistic regarding the outcome of the discussions. Some industry insiders believe that the SEC is expected to pass the application for Bitcoin ETF early next year, but in the end The results still need to wait for the SEC to officially announce the final news.
It is worth noting that the memorandum discussed between the SEC and BlackRock also attached a briefing from BlackRock, discussing two ETF redemption methods, including physical subscription mode and cash subscription mode. Bloomberg ETF analyst James Seyffart said pushanalyzeBlackRock seems to prefer the physical subscription model, but the SEC seems to prefer the cash subscription model.
Redemption in kind vs cash redemption
Regarding the operation methods and impacts of “cash subscription” and “physical subscription”, the following will compare the two.
First, in the cash subscription mode, authorized participants (APs) will use cash to create or redeem shares of the Bitcoin spot ETF, which means that authorized participants provide cash to the ETF fund, and the fund manager uses the cash to purchase Bitcoin.
The impact of this model is that there may be increased costs and tax complexities associated with cash flows. There may be capital gains tax issues due to cash transactions involved. In addition, cash redemptions may affect the relationship between the ETF and the actual market price of Bitcoin. tracking accuracy.
Schematic diagram of cash subscription mode. Source: Blackrock
If in the physical subscription mode, authorized participants (APs) will use actual bitcoins to create or redeem shares of the Bitcoin spot ETF, which means that authorized participants will hand over the bitcoins directly to the ETF in exchange for newly created ETF shares, or upon redemption, the ETF shares are exchanged for the corresponding number of Bitcoins.
The impact of this model is to avoid tax issues arising from cash transactions and to better maintain consistency between ETF assets and Bitcoin market prices.
Schematic diagram of physical purchase mode. Source: Blackrock
Overall, the subscription method of Bitcoin spot ETFs has an important impact on its performance and investors’ tax implications. Physical subscriptions are more attractive to investors who seek to be closely connected to the Bitcoin market price and pay attention to tax efficiency.
Further reading:What exactly are Bitcoin spot ETFs dragging?Bloomberg analyst: The core problem is this
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