The plot thickens in the long-running saga to get a spot Bitcoin exchange-traded fund (ETF) approved by the SEC. In recent filings, BlackRock made some curious amendments that have the crypto community buzzing about a potential “kill switch” that could be lurking within.
BlackRock’s updated S-1 for a Bitcoin ETF includes stern language about what could happen if regulators suddenly decide Bitcoin is a security. The filing warns that such a determination by the SEC or state regulators “would be expected to have an immediate material adverse impact on the trading value of Bitcoin” as well as the proposed ETF shares. It points to the XRP example, where the SEC’s enforcement action against Ripple Labs tanked XRP‘s price.
This alarming verbiage did not escape the notice of industry experts. “SEC demanding a Bitcoin ETF kill switch?” mused Tuur Demeester , founder of Adamant Research. Legal eagle Joe Carlasare called the amendment “interesting” and indicated the SEC itself demanded the security risk disclosure.
Caitlin Long, CEO of crypto-friendly Avanti Bank, tied BlackRock’s update to a proposed New Jersey law that would define virtual currencies as securities when sold to institutional investors. “Think that’s a ‘hidden’ poison pill that the anti Bitcoin crowd is inserting into the ETF docs??” she asked.
But one commentator sees the drama as overblown lawyerly behavior, assuring “Not a short term concern” per his SEC sources. Still, Carlasare now says he has “good authority” confirming the SEC dictated the controversial language to BlackRock.
So what’s really going on here? A crafty kill switch to blow up Bitcoin ETFs if regulators change their minds? Or just standard legal butt-covering as part of the SEC approval process? As the community parses the meaning behind BlackRock’s cryptic amendmends, the jury is still out.
One thing is clear – the SEC holds immense power over the futures of Bitcoin ETF applicants like BlackRock. The Commission, which is widely seen as instinctively anti-crypto by the industry, seems to be keeping them on a tight leash, demanding strict compliance every step of the way.
BlackRock’s latest filing also revealed that it received $100,000 as “seed capital” for its proposed Bitcoin ETF. The seed investor purchased shares on October 27, representing initial funding for creation units allowing the ETF shares to trade openly.
“The seed capital investor agreed to purchase $100,000 in shares on October 27, 2023, and on October 27, 2023 took delivery of 4,000 shares at a per-share price of $25.00 (the “seed shares”),” as per the filing.