How BlackRock Is Opening Doors To Wall Street Banks For Indirect Asset Holdings

BlackRock BLK has taken the next step to widen liquidity options for the spot Bitcoin ETF in anticipation of approval.  

What Happened: BlackRock’s proposed Spot Bitcoin ETF has modified its structure to enable Authorized Participants (APs), mainly Wall Street banks, to create new shares in the fund with cash and not only with cryptocurrency.

The banks that are not allowed to own crypto directly will have the option to act as APs for the BlackRock ETF.

Also Read: Fidelity Spot Bitcoin ETF Listed, Crypto Market Guzzling With Expected Approval

The decision was taken after a meeting of the U.S. SEC, BlackRock, and Nasdaq. It highlights the cash APs use in this process, which can be exchanged into bitcoin by an intermediary and warehoused by the ETF's custody provider.

It was broadly assumed that APs would be those who are large market-making firms with experience in crypto and not banks. However, with this modification by BlackRock banks will be able to be a vital part of the ETFs and elevate the position of liquidity providers.

Why It Matters: “If the SEC accepts this revised, dual model of create and redeem with cash and physical, that means the liquidity that supports the ETF shares when they trade would be increased because obviously, you have more potential APs as part of the process,” CF Benchmarks CEO Sui Chung commented as reported by CoinDesk.

He goes on to add that, unlike trading firms, American banks can assist the ETF funds with their trillion-dollar-plus balance sheets.

Price Action: At the time of writing, Bitcoin BTC/USD is changing hands at $41,019 with a 1.2% gain in the last 24 hours of trading. The last seven-day trading saw BTC losing around 7% from its value after peaking at record levels of $45,000.

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