Asset management giant Fidelity held a meeting with the Securities and Exchange Commission on Dec. 7 about its proposed spot bitcoin ETF, according to a memo on the regulator’s website.
Fidelity provided the regulator with a presentation entitled “Bitcoin ETF Workflows” that included slides that detailed “In-Kind” creation and redemption models.
“Arbitrage and hedge are more efficient with physical creations,” the presentation stated. “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.”
Bitcoin’s price has surged over the past weeks as the market has anticipated what could be the final steps toward a decision from the SEC about applications it’s been reviewing for proposed spot ETFs. Amid multiple amendments to filings and memos about meetings, regulators and asset managers have seemed to be focusing on technical aspects of how the proposed funds would work, if approved.
“Create/redeem language includes both in-kind and cash still,” Bloomberg Intelligence analyst James Seyffart wrote on X earlier Friday, commenting about an amended filing for VanEck’s proposed spot bitcoin ETF. “Looking more and more like everyone will leave that optionality in their S-1’s but 19b-4 approvals may only allow cash creates — at least to start.”
“Here’s key disclosure on this workflow: ‘Note: Registered Broker Dealer entities do not touch the coin in any workflow,'” Nate Geraci, president of advisory firm The ETF Store, wrote on X. “That’s clearly the SEC’s concern.”
On Friday, Fidelity filed an amended S-1 form with the SEC for the proposed spot fund.
BlackRock meeting
In a Nov. 28 meeting between the SEC and BlackRock about its proposed spot bitcoin ETF, the asset manager submitted a presentation about a “Revised In-Kind Model Design.”
“During our 11/20 meeting with Trading & Markets staff, we understood the SEC has certain unresolved questions around the In-kind model relating to balance sheet impacts and risks to the Market Maker’s U.S. Registered Broker/Dealer entity (“MM-BD”, as distinct from the Market Maker’s unregistered entity (“MM-crypto”)) during the redemption flow,” BlackRock said in a presentation submitted to the SEC.
(Updates to show Fidelity filed an amended S-1 form with the SEC.)
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