The revised spot Bitcoin ETF proposal from BlackRock provides access to banks, allowing them participate via broker-dealers.
Giant asset manager BlackRock Inc (NYSE: BLK) has submitted a revised version of its application for its iShares spot Bitcoin exchange-traded fund (ETF) to the United States Securities and Exchange Commission (SEC). The revised application modifies BlackRock’s ETF, making it easier for Wall Street banks to participate.
If approved, BlackRock’s ETF will allow regulated banks in the US to create new fiat-based shares in the ETF, instead of only crypto. The new model requires an interested financial institution to function as an “authorized participant” (AP). This way they can access the ETF without breaking restrictions that keep them from holding any crypto in their books. The AP will simply use a broker-dealer, who will receive the fiat, convert it to Bitcoin, and then store it with Coinbase Custody, BlackRock’s custody provider.
BlackRock’s Revised ETF Application Offers Safety and Reduced Risks
According to the revised ETF filing, BlackRock’s new model offers “superior resistance to market manipulation”. It also functions with reduced transaction costs and generally lower risks of operating events. In addition, the ETF is very safe as risks are shifted from the investors to the market makers. Furthermore, issuers do not need to pre-fund or finance sell trades. Reportedly, 9 representatives, including 6 from BlackRock and 3 from Nasdaq, presented the new model during a meeting with the SEC on November 28. It was BlackRock’s second meeting with the SEC on its spot Bitcoin ETF.
Reportedly, BlackRock had a third meeting with the SEC on Monday. Before the November 28 meeting, BlackRock had its first one on November 20.
In addition to BlackRock, 3 other applicants have met with the SEC in the last few days. Bloomberg ETF and crypto analyst James Seyffart posted images on X showing that the SEC’s Office of Market Supervision, Division of Trading and Markets, met with Fidelity Investments on December 7. The day after, the Office met with Grayscale Investments and Franklin Templeton.
Market Expects Approval in January
The SEC is reviewing 13 applications for spot Bitcoin ETFs. For BlackRock, the SEC has until January 15 to make a decision. For over a decade, the Commission has continuously rejected all applications, citing problems with market manipulation and fraud. However, the market is generally optimistic that the SEC will likely approve one or more proposals sometime soon. According to Seyffart, the approval window for spot Bitcoin ETFs is between the 5th and 10th of January. The January 10 date is the latest date the SEC must make a decision on the ARK 21Shares Bitcoin ETF from 21Shares & ARK Invest. The Commission’s decision on that application may set the tone for other submitted proposals.
Last week, BlackRock announced that it has already received seed funding for its iShares Bitcoin Trust ETF of $100,000 at $25 per share.
Meanwhile, Bitcoin recently began to rally due to multiple factors, including a potential spot BTC ETF approval and the upcoming halving. The general outlook of Bitcoin for 2024 is quite bullish, with a possible $50,000 before December ends.
