BlackRock's recent app update indicates its engagement with the SEC led by Gary Gensler on December 11, marking the third meeting in a series held over the past few weeks.
BlackRock Inc (NYSE: BLK) has implemented structural modifications to its application to launch a spot bitcoin ETF in the US. The updated filing allows Wall Street banks to generate new shares in the fund using fiat currencies, expanding beyond of cryptocurrencies. To participate, banks must acquire authorized participant (AP) status.
This adjustment is notable as regulated US banks, unable to own bitcoin directly, could now act as APs for the BlackRock ETF. Large institutions like JPMorgan or Goldman Sachs, which have substantial balance sheets, could serve as PAs, although their interest remains uncertain.
In this process, the cash used by APs can be converted into bitcoins through an intermediary and stored at the ETF's custody provider. This information comes from a memo related to a Nov. 28 meeting involving the U.S. Securities and Exchange Commission, BlackRock and Nasdaq.
There is growing optimism that the SEC could approve spot bitcoin ETFs, which could attract significant capital from retail investors. While the conventional view assumed that APs would be prominent crypto market-making companies such as Jane Street, Jump Trading and Virtu, the recent change opens the possibility for banks to participate, expanding the pool of liquidity providers. Speaking about the development, CF Benchmarks CEO Sui Chung said:
“If the SEC accepts this revised dual model of creation and redemption with cash and physical, that means that the liquidity supporting the ETF shares when they are traded would increase, because obviously, you have more potential APs as part of the process. And although commercial companies such as Jane Street, etc. They are large and expert, fundamentally they do not have the balance sheets of more than trillions of dollars that the large American banks have.”
bitcoin ETF Approval
The SEC faces a Jan. 15 deadline to make a decision on BlackRock's application for a spot bitcoin ETF, with a final decision due by March 15. Other financial firms, including Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity and Hashdex, are also awaiting the SEC's verdict.
The recent update to the application suggests that BlackRock engaged with the SEC led by Gary Gensler on December 11. This is the third meeting in recent weeks, following the previous sessions on November 20 and 28.
Analysts speculate that the US SEC could opt for simultaneous approval of multiple spot ETF filings to prevent a single applicant from gaining first-mover advantage. Approval of these ETFs before January 10 could also indicate the SEC's intention to provide a deadline for companies to list and trade spot ETFs. As the deadline approaches, any positive signal from the SEC regarding approval could push up the price of bitcoin (btc).
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