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BlackRock Updates Its Spot Bitcoin ETF to Make it Simpler for Banks' Usages

2023-12-13 16:36:35

The SEC has frequently cited BlackRock's innovative ETF algorithm's superior resistance towards market tampering as justification for rejecting spot Bitcoin ETFs.


In order to facilitate Wall Street banks' involvement in the spot Bitcoin exchange-traded fund (ETF) market, BlackRock updated its application. This allows Wall Street banks to create new fund assets using cash instead of simply cryptocurrency. Banking behemoths like JPMorgan and Goldman Sachs are going to be able to operate as approved partners for the fund under the new in-kind redeeming prepay mechanism, which will enable them to get around limitations that prohibit them from storing Bitcoin or other cryptocurrencies immediately on their financial statements.

Six BlackRock employees and three NASDAQ representatives submitted the revised model to the US Securities Exchange Commission on November 28. Since many strictly controlled institutions are unable to handle Bitcoin themselves, if allowed, the move might be an important turning point for Wall Street banks with trillion-dollar accounts eager to get engaged. In the updated approach, APs would send money to a broker-dealer, who would subsequently exchange it for Bitcoin and hold it for the ETF's custodial provider—in BlackRock's instance, Coinbase Exchange Custody—before storing it.

Another way that the new framework functions is by giving market participants greater control over risk rather than APs. Additionally, according to BlackRock, the latest structure provides superior resilience to market fraud, which has been a major factor in the SEC's continuous denial of all prior requests for spot Bitcoin ETFs. BlackRock also asserted that the new ETF design will improve uncomplicated and harmonization within the larger Bitcoin ETF environment, better shareholder safeguards, and reduce costs associated with transactions.

BlackRock Had Its Third Meeting With The SEC

Moreover, the newest SEC filing states that BlackRock spoke to the representatives of the Gary Gensler-led SEC on the third occasion on December 11. Following up on the first occasion they had with the markets commission on November 20, when they unveiled their initial in-kind redeeming plan, BlackRock and NASDAQ met with the SEC for an additional time on November 28. ETF experts forecast that somewhere around January 5 and 10, the SEC will determine several outstanding spot Bitcoin ETF registrants. A ruling from the SEC is awaited by Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex, amongst other monetary businesses.

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