Nasdaq executive says BlackRock’s first Bitcoin ETF rejection was ‘purely procedural,’ not final

An early dismissal of BlackRock’s planned spot Bitcoin ETF should not affect its eventual success, according to statements from Nasdaq executive Giang Bui on Sept. 13.

BlackRock filed an application for a spot Bitcoin exchange-traded fund (ETF) on June 15. While BlackRock filed Form S-1 to register its product, Nasdaq was responsible for filing Form 19-b4, which proposes rule changes needed to list the product.

On June 30, the U.S. Security and Exchange Commission (SEC) declared the latter filing, along with others, inadequate, leading to its early rejection. This decision, however, pertains more to regulatory procedural issues than to the substance or potential viability of the product.

However, those early rejections may not be a bad sign for the applicants. Giang Bui, Nasdaq’s Head of U.S. Equities & ETPs, told Forbes:

“Once the exchange files [19-b4], the SEC has seven business days to reject it if it determines that it doesn’t comply with the SEC rules related to form. The rejection at that stage is purely procedural, rather than an indication of viability of the product.”

After that initial rejection, Nasdaq and others filed updates for various ETF applications and explicitly listed Coinbase as a surveillance-sharing agreement partner. Bui acknowledged this by stating that it is unusual to list partners in this way; however, she said that the late addition was Nasdaq’s attempt to make its filing “as strong as possible.”

Other spot Bitcoin ETFs are pending

BlackRock’s proposed spot Bitcoin ETF is not the only application of its type. Nasdaq is simultaneously handling a similar proposal from Vaklyrie Investments. Meanwhile, another exchange, Cboe, is handling proposals from other asset management firms including Ark Invest, VanEck, WisdomTree, Invesco, and Fidelity. NYSE Arca is handling an ETF proposal from Bitwise. Many of those proposals are extremely similar and describe a surveillance-sharing agreement with Coinbase.

Elsewhere, Grayscale aims to turn its existing GBTC fund into a spot Bitcoin ETF in a somewhat different manner. Bui acknowledged Grayscale’s proposal and its recent legal victory, noting that Nasdaq is “analyzing what that means for [its] filings.”

In late August, the SEC delayed its decision on most of the above spot Bitcoin ETFs. The SEC is expected to decide on certain filings in October.

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