U.S. Securities and Exchange Commission expresses disapproval of BlackRock’s Updated ETF Filing Submission


As the debut of BlackRock’s Bitcoin ETF draws closer, the company is under investigation from the SEC for its use of a third-party broker and custodian, Coinbase.

The competition for a Bitcoin ETF is heating up as BlackRock and other candidates are making last-minute adjustments to their ETF applications before the holidays. The fact that BlackRock intends to use a “Prime Execution Agent”—a third-party broker—to manage the Bitcoin transactions involving its ETF funds is disclosed. Regardless, the SEC isn’t entirely on board with this strategy.

On behalf of BlackRock, this prime execution agent will be buying and selling bitcoins. Nevertheless, this strategy has the SEC bewildered. In addition, Blackrock said in the filing that if they keep going in this direction,

The trust’s account will not be funded with any shares until the appropriate quantity of bitcoin has been awarded by the bitcoin custodian or prime execution agent.

Though it did name Coinbase as the custodian in its June ETF filing, BlackRock has been mum on the identity of the third-party broker. Coinbase, the prospective custodian, is embroiled in a legal battle with the SEC, adding another layer of complexity.

Based on their findings, certain experts, including Eric Balchunas, have stated that the SEC is favoring the “Cash Create” approach over the “in-kind” method for creating ETF shares.

Although certain issuers’ ETFs may not be accepted, analyst Seyffart confidently anticipated a 90% possibility of acceptance before January, despite a few hurdles. He expects the approvals will likely be revealed by early January.

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