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Could BlackRock Own an SEC-Approved ETF? BlackRock is reviewing its spot Bitcoin exchange-traded fund (ETF) application to facilitate the participation of Wall Street banks. This will be done by creating new shares not with cash, but only with crypto for the fund. The new form of redemption “prepayment” model, will allow banks like JPMorgan or Goldman Sachs to act as authorized participants for the fund and overcome restrictions that prevent them from holding Bitcoin or crypto directly in their balance sheets.
Six BlackRock members and three Nasdaq representatives, presented the new model at a meeting with the US Securities and Exchange Commission (SEC) on November 28. If approved, this move could be a game changer for Wall Street banks that want to get involved with their trillion-dollar balance sheets, as many strictly regulated banks can’t hold Bitcoin themselves.
According to the revised model, Authorized Participants (APs) will transfer cash to a broker, the broker will convert it to Bitcoin and then store it with the ETF’s custodian (Coinbase Custody in the case of BlackRock). The new structure also works by moving risk away from APs and into the hands of market makers.
BlackRock said the new model also offers “superior resistance to market manipulation,” one of the main reasons the SEC has repeatedly rejected all previous spot Bitcoin ETF applications.
In addition, BlackRock claimed that the new ETF structure would enhance investor protection, reduce transaction costs, and increase “simplicity and compliance” in the broader Bitcoin ETF ecosystem.
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BlackRock meets with the SEC for the third time
According to the SEC file, BlackRock had its third meeting with the SEC under the leadership of Gary Gensler on December 11.
BlackRock and Nasdaq’s second meeting with the SEC on November 28, after the first meeting held with the securities regulator on November 20, was a continuation of the meeting where it presented the original in-kind redemption model.
The SEC must decide on BlackRock’s application by January 15, with the final deadline set for March 15. Meanwhile, ETF analysts predict the SEC will make a decision on several pending spot Bitcoin ETF applications around January 5-10. Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex are among the other financial firms awaiting a decision from the SEC during these dates.
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