BlackRock, a leader in asset management, has revised its Bitcoin ETF offerings, creating new opportunities for Wall Street banks. This initiative, aimed at facilitating the creation of new fund shares, has the potential to revolutionize the way financial institutions engage with the cryptocurrency market.
BlackRock, globally renowned for its asset management, is making significant changes to its Bitcoin Exchange-Traded Fund (ETF). With the new model, major banks like JPMorgan and Goldman Sachs will be able to more easily participate in the fund, creating new shares not just with crypto assets but also with cash.
This change could be groundbreaking for multi-billion dollar balance sheet banks, which due to strict regulations, cannot directly invest in Bitcoin. Under the updated model, Authorized Participants (APs) will be able to transfer cash to a broker-dealer, who will then convert it into Bitcoin. The Bitcoin will then be stored by the ETF’s custody service provider, in this case, Coinbase Custody.
BlackRock argues that the new fund structure will provide “better resistance to market manipulation,” which has been one of the main arguments of the SEC (Securities and Exchange Commission) against approving Bitcoin ETFs. The firm also claims that these changes will enhance investor protection, reduce transaction costs, and simplify the entire Bitcoin ETF ecosystem.
BlackRock has already had its third meeting with the SEC under the leadership of Gary Gensler, which took place on December 11. The previous meeting, on November 28, was a continuation of the first meeting on November 20, where the original in-kind redemption model was presented.
The SEC has until January 15 to make a decision on BlackRock’s proposal, with a final deadline of March 15. Meanwhile, ETF analysts predict that the SEC will make a decision on several Bitcoin ETF applications between January 5 and 10.
Other financial firms awaiting the SEC’s decision include Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex. All these entities are hopeful for a favorable resolution that could open up the cryptocurrency market to wider institutional participation.
Photo by Chenyu Guan on Unsplash
