BlackRock has revised its application for a spot Bitcoin
exchange-traded fund (ETF) in order to facilitate the participation of Wall Street banks, intending to create new fund shares using cash instead of just cryptocurrency. BlackRock also claims that the revised ETF model offers resistance against market manipulation, which has been a key reason for the SEC's repeated rejection of ETFs.
BlackRock's innovative model
This new "prepay" redemption model allows banks such as JPMorgan or Goldman Sachs to act as authorized participants for the fund. This model enables banks to circumvent restrictions that prevent them from holding cryptocurrency directly on their balance sheets.
The new model was presented on November 28th by six BlackRock members and three from Nasdaq during a meeting with the United States Securities and Exchange Commission (SEC).
If BlackRock's plan is approved, this could be a game-changer for Wall Street banks with trillion-dollar balances who want to participate, as highly regulated banks themselves aren't able to hold Bitcoin.
BlackRock has already stated that the new model provides significant resistance against market manipulation. This is a valuable addition, as the SEC has rejected ETFs multiple times due to this concern. Additionally, BlackRock claims that the new ETF structure would enhance investor protection, reduce transaction costs, and make it user-friendly.
The SEC must make a decision on BlackRock's application by January 15th, but the deadline could extend to the final date of March 15th.