According to The Block report, the US Securities and Exchange Commission (SEC) has collaborated with ETF issuers in recent weeks to address three major concerns related to ETFs, including: which creation and redemption model to adopt, which institutions to designate as authorized participants (APs), and how to handle hard forks and airdrops.
Regarding the issue of “which creation and redemption model to adopt,” this has been discussed for a long time. Due to tax and procedural advantages, most issuers prefer the “in-kind model.” However, the SEC insists that issuers must choose the “cash model.” It was previously reported that the SEC issued a notice stating that if issuers wanted to be included in the first approved list, they had to amend their prospectus and adopt the “cash model.” Eventually, all issuers responded to this requirement, and even Grayscale, which had always insisted on using the in-kind model, reportedly amended its S-3 document on December 26 to adopt the cash model.
On the other hand, issuers have also started selecting financial institutions to act as “authorized participants” in their proposed Bitcoin ETFs in recent weeks. Grayscale is reportedly in talks with companies including JPMorgan and Goldman Sachs, while BlackRock previously designated JPMorgan Securities as the authorized participant for its proposed Bitcoin ETF, including Jane Street Capital.
The last issue that has been resolved is how to handle hard forks and airdrops on the Bitcoin network. Sources revealed that issuers have agreed that their trusts will relinquish any rights related to hard forks, including receiving forked coins through airdrops. For example, on December 26, Grayscale amended its Form 3-S to specify that its proposed Bitcoin ETF, if approved, will not receive any tokens through hard forks or airdrops.
