BlackRock's Bitcoin ETF Proposal Invites Wall Street Banks

BlackRock’s Bitcoin ETF Proposal Invites Wall Street Banks

Proposed changes enable ETF share creation with cash, aiding U.S. banks like JPMorgan and Goldman Sachs, barred from direct Bitcoin holdings.

Written By:
Ronak Kumar

Last updated: December 12, 2023 4:14 PM

Published December 12, 2023 4:14 PM

Last updated: December 12, 2023 4:14 PM

Published December 12, 2023 4:14 PM

The largest asset manager, BlackRock, has proposed a spot Bitcoin ETF, potentially opening doors for major Wall Street banks.

The adjustment allows authorized participants, crucial to ETF operations, to create new fund shares using cash instead of solely relying on cryptocurrencies.

This shift benefits regulated U.S. banks like JPMorgan and Goldman Sachs, which, due to restrictions, can’t hold Bitcoin directly.

The cash used by authorized participants can be converted into Bitcoin by an intermediary and stored by the ETF’s custody provider.

This alteration raises optimism for SEC approval of spot Bitcoin ETFs, potentially attracting significant investment from retail players.

While the common belief was that market-making firms like Jane Street would be involved, this change allows banks to participate, potentially broadening liquidity provider participation and enhancing overall market support.

The SEC’s acceptance of this dual model could increase liquidity, given the substantial balance sheets of major U.S. banks.