Fidelity engaged in discussions with the Securities and Exchange Commission (SEC) on December 7 regarding its proposed spot bitcoin ETF, as outlined in a memo on the regulator’s official website.
The asset management giant presented the SEC with a comprehensive overview titled “Bitcoin ETF Workflows,” encompassing slides that elucidate “In-Kind” creation and redemption models.
The presentation emphasized the efficacy of arbitrage and hedging through physical creations, stating, “Self-clearing ETF market maker firms can efficiently facilitate arbitrage by acting as Agency AP for non-self-clearing ETF market maker firms with Crypto Affiliates. Allowing for physical creation and redemption is pivotal to enhance trading efficiency and secondary market pricing for all participants.”
As the market eagerly anticipates the SEC’s decision on proposed spot ETFs, Fidelity filed an amended S-1 form for the proposed spot fund on Friday. The surge in Bitcoin’s price in recent weeks underscores the anticipation surrounding the SEC’s deliberations.
In a separate development, BlackRock discussed its proposed spot bitcoin ETF with the SEC on November 28, submitting a presentation on a “Revised In-Kind Model Design.” The presentation addressed the SEC’s unresolved questions related to the In-kind model, particularly concerning balance sheet impacts and risks to the Market Maker’s U.S. Registered Broker/Dealer entity during the redemption flow.
These meetings and presentations signify a focus on technical aspects by regulators and asset managers, with a keen interest in understanding the operational intricacies of the proposed funds under consideration.
