BlackRock and NASDAQ have revised their spot Bitcoin exchange-traded fund (ETF) application to make it easier for Wall Street banks to participate. The new in-kind redemption model, presented during a Nov. 28 meeting with the United States Securities Exchange Commission, will allow banking giants such as JPMorgan and Goldman Sachs to act as authorized participants for the fund, circumventing restrictions that prevent them from holding Bitcoin or crypto directly on their balance sheets.
If approved, this move could be a game-changer for highly regulated banks with trillion-dollar balance sheets looking to get involved in the cryptocurrency market. The revised model involves authorized participants transferring cash to a broker-dealer, which then converts the cash into Bitcoin before it is stored by the ETF’s custody provider, Coinbase Custody in BlackRock’s case.
BlackRock claims the new model offers superior resistance to market manipulation and strengthens investor protections, lowers transaction costs, and increases simplicity and harmonization across the wider Bitcoin ETF ecosystem.
The SEC must make a decision on BlackRock’s application by Jan. 15, with the final deadline scheduled for March 15. Meanwhile, ETF analysts predict the SEC will issue a decision on several pending spot Bitcoin ETF applicants sometime between Jan. 5-10.
This meeting represents a significant development in the ongoing effort to establish a regulated Bitcoin ETF, which has been a long-standing goal of many financial firms. Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex are among the other firms awaiting a decision by the SEC. The outcome of these applications could have far-reaching implications for the future of cryptocurrency and its integration into traditional financial systems.
