Fidelity Investments is the latest potential ETF issuer to meet with the United States Securities and Exchange Commission (SEC) over its application for the spot Bitcoin ETF offering that was filed a few months ago.
Fidelity Presents SEC With Bitcoin ETF Workflows
According to a memo that was released by the SEC, the top investment asset management company had a chat with the agency on Thursday to discuss details of its proposed ETF product. During the meeting, Fidelity presented a document titled “Bitcoin ETF Workflows” to the SEC, with several slides referring to the “in-kind” creation and redemption model, similar to BlackRock’s preferred model.
The other alternative to the “in-kind” model is the “cash create” summary model. Noteworthy, this is the redemption mechanism that the SEC is trying to convince ETF issuers to adopt but a significant percentage of them seem to prefer the former.
Per the presentation, “Arbitrage and hedge are more efficient with physical creations. Self-clearing ETF market maker firms can facilitate efficient arbitrage in acting as Agency AP for non-self-clearing ETF market maker firms with Crypto Affiliates. Allowing for physical creation and redemption is critical to enhance trading efficiency and secondary market pricing for all participants.”
SEC is Intensifying its Review Process
The intensity in potential Bitcoin ETF approval is a result of the technical conversations that are now taking place between the SEC and many of the ETF applicants as the expected narrow window for the product’s approval is drawing closer.
The SEC and those it has met with are now reportedly delving into intricate aspects like custody arrangements, creation and redemption mechanisms, and investor risk disclosures. Suggestively, this could be an indication that the spot Bitcoin ETF process is reaching its final steps.
A similar meeting was held between the SEC, BlackRock, and Grayscale at different times. Grayscale has had a bunch of meetings with the agency, particularly its Trading and Markets Division. In one of those meetings, Grayscale revealed the execution of a Transfer Agency and Service Agreement with BNY Mellon for its spot Bitcoin ETF.
These meetups and the subjects of discussion are probably an indication that the SEC is wrapping up on the review process and getting set to unveil its decision by January.
Fidelity has taken a leap of faith in its spot Bitcoin ETF journey and listed it in the Depository Trust & Clearing Corporation (DTCC) under the ticker, FBTC. BlackRock’s iShares Bitcoin Trust IBTC and Invesco Galaxy Bitcoin ETF BTCO are also on the list.
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