BlackRock Updates Its Spot Bitcoin ETF Filing
The recent modifications to the S-1 form for the iShares Bitcoin Trust bring forth six significant alterations in the handling and operational framework concerning its Bitcoin and cash reserves.
BlackRock’s most recent update ushered in 21 core amendments. However, the filing on Dec. 18 presents notably fewer changes, possibly suggesting final adjustments before the launch.
BlackRock has altered its operational strategy, replacing the role of “Prime Broker” with that of a “Prime Execution Agent.” This signals a revamped approach to managing the Trust’s trading balances for Bitcoin and cash assets.
While a Prime Broker typically offers various services for trading strategies at a cost, an Executing Agent processes buy or sell orders for a client. The change in Coinbase’s role from Prime Broker to Prime Execution Agent implies a shift in perceived responsibilities towards BlackRock’s ETF. As a Prime Execution Agent, Coinbase primarily processes orders for the ETF, deviating from the broader range of services associated with a Prime Broker.
The amendment introduces a Directed Trade Model and an Agent Execution Model, outlining cost responsibilities between the Trust and the Authorized Participants or their agents, the Non-AP Arbitrageurs, in scenarios where Bitcoin market prices differ from the NAV calculations.
This shift introduces a substantial risk-reward system for Authorized Participants and Non-AP Arbitrageurs, aligning their interests with market fluctuations and the Trust’s NAV calculations.
The Trust’s assets remain subject to an omnibus claim, maintaining consistency with the previous structure, including pro rata entitlement to assets.
BlackRock has also updated roles and compliance responsibilities within the ETF, replacing “Market Makers” with “Bitcoin Trading Counterparties.” This suggests a broader involvement in Bitcoin trading, emphasizing compliance with regulations.
Changes in Basket Creation introduce a dual component – cash and Bitcoin – for each Basket, offering a more adaptable approach. It allows for varied proportions of cash and Bitcoin in Baskets.
The Trust has outlined a structure for Bitcoin redemptions mirroring the creation process, with additional provisions for indicative Basket Amounts and potential delays in Bitcoin transactions due to network issues.
Moreover, BlackRock has highlighted potential issues related to the CF Index Administrator, addressing system failures or errors that could impact the Trust’s net asset value (NAV).
Finally, the ticker symbol for the Trust’s shares on NASDAQ has been confirmed as “IBIT,” simplifying identification for investors interested in tracking the ETF’s performance.