BlackRock wants to make its spot Bitcoin ETF more accessible to Wall Street banks. The asset manager has in fact reviewed the operation of its index fund to allow banking giants to participate in the Bitcoin market without violating the regulations to which they are subject.
BlackRock revises its spot Bitcoin ETF
BlackRock is looking to woo Wall Street banks with its recently revised Bitcoin Spot ETF. Indeed, the asset management giant has modified the operation of the fund to allow financial institutions to participate more easily.
Thus, the structure updated is now based on a redemption mechanism in kind called “prepay”. More precisely, banks will be able to create new shares of the fund by providing liquidity and not bitcoins. Thanks to this arrangement, they avoid directly holding BTC in their balance sheet, which remains prohibited by regulations.
Therefore, this paradigm shift is expected to significantly expand the pool of authorized participants (APs) in the ETF. Giants such as JPMorgan, Goldman Sachs or Morgan Stanley, with colossal balance sheets, could thus take part in the fund.
Additionally, liquidity provided by APs would be converted into bitcoins by an intermediary before being deposited with the BlackRock ETF’s custodian, Coinbase. This configuration thus keeps crypto risk away from participating banks.
BlackRock highlights the resilience of its fund
In its argument to the American stock market watchdog, BlackRock asserts that this structure strengthens the fund’s resistance to market manipulation and abuse. An essential point in the eyes of the SEC which rejected previous requests for Bitcoin Spot ETFs.
In addition, the asset manager also highlights better investor protection, reduced transaction costs as well as harmonization of the Bitcoin ecosystem
In addition, BlackRock met with the SEC twice in November regarding this ETF application, and again in early December. The SEC must make its decision by January 15, with a final deadline of March 15. Other players like Grayscale and Bitwise are also waiting for a green light.
Optimism is growing about potential approval. Indeed, this green light would pave the way for massive flows of institutional capital into bitcoin. And this, via a vehicle that is much more reassuring for them than a direct investment.
In short, with this reshuffle, BlackRock seems to have understood the SEC’s reluctance, particularly regarding the risks of manipulation. In addition, the participation of banks also provides a guarantee of respectability. The Wall Street giant has thus put all the chances on its side. All that remains is to wait for the SEC’s verdict on what would be a small revolution.
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