BlackRock, the world’s largest asset manager, has updated its spot Bitcoin exchange-traded fund (ETF) application to make it more accessible for Wall Street banks. The updated application now allows banking giants like JPMorgan and Goldman Sachs to generate new shares in the fund using cash rather than cryptocurrencies.
The revised redemption method, called “prepay,” permits authorized participants (APs) from major banks to circumvent restrictions that prevent them from holding Bitcoin or crypto directly on their balance sheets. By sending cash to a broker-dealer, which then converts it into Bitcoin, these APs can actively engage in the fund. For BlackRock, Coinbase Custody handles the ETF’s custody services.
The revised model was presented to the United States Securities Exchange Commission (SEC) by six BlackRock members and three from NASDAQ during a meeting held on November 28. This updated structure addresses concerns about market manipulation and aims to bolster investor protections. BlackRock asserts that this new setup offers improved resilience against market manipulation, a significant consideration that previously led the SEC to deny spot Bitcoin ETF applications.
On December 11, BlackRock had its third meeting with the SEC, chaired by Gary Gensler. The prior meeting on November 28 followed an initial discussion on November 20, where the original in-kind redemption model was introduced.
The SEC is anticipated to reach a decision on BlackRock’s application by January 15, 2024.
