BlackRock is making it easier for Wall Street banks like Goldman Sachs to participate in its spot Bitcoin ETF

Titan in asset management Black rock has revised his place Bitcoin ETF (exchange-traded fund) application to make it easier for Wall Street banks to participate.

The revised version of the ETF allows for the creation of new shares using cash instead of just cryptocurrency. Under the new arrangement, banks will also be able to act as authorized participants for the ETF.

This will allow major banks like JPMorgan and Goldman Sachs to bypass the restrictions that currently prevent them from holding Bitcoin and other cryptocurrencies directly on their balance sheets.

The new model was introduced to the US Securities and Exchange Commission (SEC) on November 28. meeting by six members of BlackRock and three members of Nasdaq.

Under the revised model, authorized participants would transfer cash to a broker-dealer.

This broker-dealer will then convert the money into Bitcoin before being stored at the ETF’s custodian, which BlackRock has identified as Coinbase Custody.

The model will also shift risk away from authorized participants and put more into the hands of market makers.

BlackRock said the new model “provides superior resistance to market manipulation.”

This concerns one of the Securities and Exchange Commission (SEC) main concerns, which has led to the regulator repeatedly rejecting all previous spot Bitcoin ETF applications.

BlackRock added that the new ETF structure would also strengthen investor protection while lowering transaction costs and increasing “simplicity and harmonization” across the broader Bitcoin ETF ecosystem.

BlackRock’s Spot Bitcoin ETF Could Open a Floodgate of Trillions of Dollars

The potential adoption of this new model could lead to a significant increase in investment inflows into the new product.

It allows Wall Street banks worth trillions of dollars to participate without directly exposing themselves to crypto.

Regulations currently prohibit these trillion-dollar banks from adding Bitcoin and other cryptocurrencies to their balance sheets.

I probably want to get them out of the way, clear the runway

— Eric Balchunas (@EricBalchunas) November 28, 2023

The SEC must make a decision on BlackRock’s application by January 15, with the deadline set for March 15. However, ETF analysts predict that the SEC will announce their decision on several pending applications between January 5 and 10.

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