U.S. SEC Frowns at New Addition in BlackRock’s Updated ETF Filing

As BlackRock and other applicants are finalizing and adjusting their ETF application before the holidays, The race for a Bitcoin ETF is getting exciting. BlackRock has included its plans to use a “Prime Execution Agent” ( A third-party broker to handle Bitcoin transactions for its ETF funds). Although the SEC is not fully in support of this approach. 

The role of this Prime Execution Agent is to buy and sell Bitcoins on behalf of BlackRock. However, the SEC is unsure about this approach. Blackrock further stated in the filing that if they continue with this approach,

No shares will be issued unless the Bitcoin Custodian or Prime Execution Agent has allocated to the Trust’s account the corresponding amount of Bitcoin.

 BlackRock has yet to specify who the third-party broker would be, but it chose Coinbase as the custodian in its previous ETF filing back in June. The proposed custodian, Coinbase is currently in a legal fight with the SEC, which could make things more complex.

Some analysts including Eric Balchunas have reported based on their observations that the SEC is pushing for the “Cash Create” method for ETF share creation over the 'in-kind' method.

Another analyst Seyffart believes that despite a few challenges, the approvals are likely to be announced by early January, although some issuers ETF might not be approved, he confidently predicted a 90% chance of approval by January