Bitcoin ETFs according to BlackRock are not only a new investment gateway for Wall Street banks, but also a revolutionary approach to the way assets are managed. A recent meeting held by the SEC involving BlackRock and Nasdaq unveiled a strategy that shifts the burden of risk to cryptocurrency market makers, changing the face of a potential fund.
Bank favoritism
According to SEC memos that have just seen the light of day, BlackRock intends to market a structure that will allow Wall Street banks to more easily participate in a Bitcoin ETF fund, while shifting the risk to cryptocurrency market makers.
Indeed, BlackRock is planning to change the model for redeeming shares in the Bitcoin ETF, and this is crucial to how banks will participate in this innovative product. The meeting, which took place at the end of November, unveiled new details about the company’s strategy.
So far, the absence of a Bitcoin ETF in the U.S. space has been a real puzzle for investors. Such a form of fund could have attracted big money to the cryptocurrency market. However, while the prospect is promising, SEC regulations have so far placed many obstacles in the way of approving such products, fearing the possibility of Bitcoin market manipulation.
Only a month to go until a decision on spot Bitcoin ETFs
Although the SEC has yet to issue a final decision on the iShares Bitcoin Trust (IBTC) application from BlackRock, experts expect a verdict in early January.
BlackRock is making changes to its share repurchase model that contrast with earlier proposals. Previously, a T+1 settlement model was adopted, which assumed faster share settlements. However, the new strategy is to rely on cryptocurrency market makers, starting buybacks with them specifically, before Wall Street banks even get involved.
The change in the settlement plan also has reference to regulatory changes by the SEC. The body is imposing new rules to take effect in May 2024, requiring the settlement of stocks and ETFs within one business day.
Spot bitcoin ETFs protected from manipulation
BlackRock said the new model is designed to provide greater protection against market manipulation. The company also stressed that this settlement method is expected to bring simplicity and consistency across the ETF ecosystem.
Large financial institutions typically use third-party services to hold digital assets. The model of ETF share buybacks by cryptocurrency market makers will make it significantly easier for institutions to participate in this market, which could result in an increase in investment capital diverted specifically toward bitcoin ETFs.
