BlackRock’s Approach to Spot Bitcoin ETFs Paves the Way for Wall Street Banks

Key Takeaways:

• BlackRock’s modification allows authorized participants to create new fund shares using cash, a departure from the previous requirement of utilizing crypto.
• Traditional Wall Street banks, constrained by regulations that prevent direct involvement with crypto, can now become authorized participants in BlackRock’s ETF, potentially expanding the market’s liquidity providers.
• The cash used by authorized participants can be converted into Bitcoin through an intermediary and stored securely by the ETF’s custody provider, according to a memo filed after a meeting involving BlackRock, the U.S. Securities and Exchange Commission, and Nasdaq.
• The change in mechanics raises optimism for the approval of spot Bitcoin ETFs by the SEC, signaling a potential influx of capital from retail investors and altering the dynamics of the digital assets market.

In a groundbreaking move, BlackRock has revamped the structure of its proposed spot Bitcoin ETFs, creating new possibilities for authorized participants (APs) and, notably, opening the door for traditional Wall Street banks to play a significant role in the crypto asset market. This strategic adjustment has the potential to reshape the landscape of the digital assets industry.

JUST IN: 🇺🇸 BlackRock met with the SEC for the third time to discuss the details about it’s spot #Bitcoin ETF yesterday 👀 pic.twitter.com/yL804c99nh

— Bitcoin Magazine (@BitcoinMagazine) December 12, 2023

BlackRock stated that the updated model provides enhanced resistance against market manipulation, addressing a key factor that has consistently led the SEC to reject previous spot Bitcoin ETF applications. Furthermore, BlackRock asserted that the revised ETF framework aims to bolster investor safeguards, reduce transaction expenses, and promote greater simplicity and coherence within the broader Bitcoin ETF ecosystem.

Damn, the SEC is busier than Santa’s elves. BlackRock’s third meeting with them yesterday is the most notable IMO as everyone is waiting to see if they can convince SEC to allow in-kind creations in the first run of approvals. https://t.co/r2jqgpg87m

— Eric Balchunas (@EricBalchunas) December 12, 2023

Read More: Bitcoin Price Prediction

Conclusion:

BlackRock’s innovative approach to spot Bitcoin ETFs streamlines the process for authorized participants and extends an invitation to traditional Wall Street banks, previously restricted by their inability to handle crypto directly. This move has the potential to diversify liquidity providers, marking a pivotal moment in the crypto market’s evolution.

Source: CoinDesk