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Financial investment firm BlackRock has revised its application for a spot Bitcoin exchange-traded fund (ETF), with a new model to make it more accessible for Wall Street banks to be involved with crypto.
The new model will provide a platform for major banks such as Goldman Sachs and JPMorgan – both of which are crypto advocates – to act as authorised participants in the ETF fund. This will help them around restrictions that limit them from holding Bitcoin directly on their balance sheets, allowing them a way to gain exposure to crypto. The “prepay” model was presented to the United States Securities and Exchange Commission (SEC) in a meeting with members from both BlackRock and Nasdaq.
The ETF, if approved, would be an innovative step for Wall Street banks and firms who are looking to gain exposure to Bitcoin. With regulatory pressure from the SEC against Bitcoin, institutional firms cannot hold Bitcoin or crypto on their balance sheets without rigorous processes. A spot ETF, especially under the BlackRock model, would offer the firms and bank access to the crypto market in a brand new way.
BlackRock’s new spot Bitcoin ETF model
Under BlackRock’s platform, “authorised participants”, referred to as APs, would transfer fiat to a broker. The broker would convert the cash to Bitcoin or approved cryptocurrencies. That would then be stored with the ETF custody provider, which would be Coinbase Custody, as BlackRock’s provider. This reduces risk from the AP and, according to BlackRock, is an approach that dimities market manipulation. The ETF would also work to strengthen investor protection while keeping transaction fees lower.
BlackRock’s meeting with the SEC
BlackRock has been meeting with the SEC in a bid to gain approval for the SEC. To date, there have been three meetings, with the most recent taking place on December 11th. The second meeting took place towards the end of November, a follow-up just over a week after its first meeting on November 20th. This initial meeting was the first time the firm, along with Nasdaq, proposed the original model.