BlackRock Revises Spot Bitcoin ETF for Easy Bank Access

In order to facilitate Wall Street banks' involvement, BlackRock has updated its spot Bitcoin (BTC) exchange-traded fund (ETF) application.

This is achieved by allowing Wall Street banks to create new fund shares using cash instead of just cryptocurrency.

Banking behemoths like JPMorgan and Goldman Sachs will be able to function as authorized participants for the fund under the new in-kind redemption "prepay" model, allowing them to get around limitations that prohibit them from holding Bitcoin or other cryptocurrencies directly on their balance sheets.

Six BlackRock and three Nasdaq representatives presented the new model to the US Securities and Exchange Commission (SEC) on November 28.

Since many highly regulated banks are unable to hold Bitcoin themselves, if approved, the move could be a game-changer for Wall Street banks with trillion-dollar balance sheets looking to get involved.

Authorized participants (APs) would transfer funds to a broker-dealer under the revised model, and the broker-dealer would then convert the funds into Bitcoin.

The funds would then be stored with the ETF's custody provider, Coinbase Custody in BlackRock's case.

Another function of the new structure is that it also gives market makers greater control over risk rather than APs.

Additionally, according to BlackRock, the new model provides "superior resistance to market manipulation," which has been a major factor in the SEC's repeated denial of all previous applications for spot Bitcoin ETFs.

Sources:

https://cointelegraph.com/news/blackrock-bitcoin-etf-model-revised-easy-bank-access

https://www.sec.gov/comments/sr-nasdaq-2023-016/srnasdaq2023016-303319-781202.pdf