BlackRock’s Revised Bitcoin ETF Application Aims to Attract Wall Street Banks
BlackRock has made changes to its spot Bitcoin exchange-traded fund (ETF) application in an effort to make it more accessible for Wall Street banks. The new model allows banking giants like JPMorgan and Goldman Sachs to participate in the fund by creating new shares with cash instead of crypto. This enables them to bypass restrictions that prevent them from holding Bitcoin directly on their balance sheets. The revised model was presented by BlackRock and NASDAQ representatives in a meeting with the United States Securities Exchange Commission. If approved, this move could be significant for highly regulated banks looking to enter the crypto market.
New Redemption Model and Risk Allocation
Under the revised model, authorized participants (APs) would transfer cash to a broker-dealer, which would then convert the cash into Bitcoin stored by the ETFβs custody provider, Coinbase Custody. This new structure also shifts risk away from APs and places it more in the hands of market makers. BlackRock claims that this model offers better resistance against market manipulation, addressing one of the SEC’s concerns with previous spot Bitcoin ETF applications. Additionally, BlackRock believes that this new ETF structure would enhance investor protections, reduce transaction costs, and bring simplicity to the wider Bitcoin ETF ecosystem.
Third Meeting with SEC
In a recent SEC filing, it was revealed that BlackRock had a third meeting with the SEC on December 11. This meeting is seen as crucial since everyone is waiting to see if BlackRock can convince the SEC to allow in-kind creations in the first round of approvals for Bitcoin ETFs.
Hot Take: Will BlackRock’s Revised Model Pave the Way for Bitcoin ETF Approvals?
BlackRock’s revised spot Bitcoin ETF application, which allows Wall Street banks to participate using cash rather than crypto, has the potential to revolutionize the market. By addressing concerns about market manipulation and offering increased investor protections, this new model may sway the SEC’s decision in favor of approving Bitcoin ETFs. If approved, it would open the floodgates for other financial firms awaiting a decision from the SEC. The outcome of BlackRock’s meetings with the SEC will be closely watched by industry experts and investors alike as they eagerly anticipate the future of Bitcoin ETFs.
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