BlackRock, the world's largest asset manager, has made revisions to its spot Bitcoin exchange-traded fund (ETF) application.
BlackRock, the world's largest asset manager, has made revisions to its spot Bitcoin exchange-traded fund (ETF) application in a move aimed at facilitating the participation of Wall Street banks. The revised application allows banking giants like JPMorgan and Goldman Sachs to create new shares in the fund using cash instead of cryptocurrencies.
This new redemption model, called "prepay," enables authorized participants (APs) from major banks to bypass restrictions that prevent them from holding Bitcoin or crypto directly on their balance sheets. By transferring cash to a broker-dealer, which then converts it into Bitcoin, the APs can participate in the fund. Coinbase Custody serves as the ETF's custody provider in BlackRock's case.
Presented to the United States Securities Exchange Commission (SEC) by six BlackRock members and three from NASDAQ in a meeting on November 28, the revised model aims to address concerns such as market manipulation and enhance investor protections. BlackRock believes that the new structure offers superior resistance to market manipulation, a key factor that has previously led the SEC to reject spot Bitcoin ETF applications.
BlackRock recently had its third meeting with the SEC on December 11, led by Chairman Gary Gensler. The previous meeting on November 28 was a follow-up to the initial meeting on November 20, during which the original in-kind redemption model was presented.
The SEC is expected to make a decision on BlackRock's application by January 15, 2024.
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