BlackRock Unveils Redemption Mechanism of its Bitcoin ETF and Designates Ticker for the Instrument
BlackRock has designated the ticker symbol IBIT for a possible spot ETF tied to the first cryptocurrency in their updated documentation.
They also outlined the process for creating and redeeming the ETF shares.
Currently, the redemption model for this potential ETF is solely cash-based and has not yet been approved by the SEC.
Redemptions in the form of the underlying asset (Bitcoin) are still pending regulatory approval.
The Trust will constantly issue and redeem Baskets, with these transactions primarily being carried out in exchange for cash. However, pending regulatory approval, these transactions may also involve exchanging Bitcoins.
The SEC appears to lean towards a “cash” model, which would require BlackRock to sell the stored Bitcoins immediately and then return the money to investors who want to redeem their shares.
According to stock analyst Eric Balchunas from Bloomberg, BlackRock may have to wait before implementing a “natural” redemption mechanism.
