BlackRock's Adjusted Bitcoin ETF Structure Paves the Way for Wall Street Banks to Join In

A modification to BlackRock's proposed spot Bitcoin (BTC) ETF introduces the possibility for major Wall Street banks, restricted from holding cryptocurrencies, to assume a significant role, as per a recent CoinDesk report. BlackRock has recently altered the ETF mechanics, allowing authorized participants (APs) to create new fund shares using cash, rather than exclusively relying on cryptocurrency.

This adjustment opens the door for highly regulated U.S. banks, such as JPMorgan or Goldman Sachs, to potentially act as APs for BlackRock's ETF, leveraging their substantial balance sheets. The process involves cash used by APs being converted into Bitcoin by an intermediary and stored by the ETF's custody provider, according to a memo filing from a November 28 meeting involving BlackRock, the U.S. Securities and Exchange Commission, and Nasdaq.

This development has increased optimism for the approval of spot Bitcoin ETFs by the SEC, potentially attracting significant retail investor funds and expanding the range of liquidity providers beyond traditional market-making firms.

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