BlackRock’s Cash-Based ETF Play Could Change the Game; Here’s How

It’s not easy to predict what’s going to be the next cause of concern in the cryptocurrency world. Now, the entire community is on edge as big names like Grayscale, Bitwise, and VanEck anxiously await the SEC’s decision on Bitcoin ETFs.

This regulatory call, slated for January, has serious implications for the strategies of major players, with financial giant BlackRock taking center stage in this crypto drama. 

BlackRock’s Big Shift

Within this context, BlackRock’s 3rd strategic revision of its Bitcoin ETF proposal emerges as a breaking point. Notably, the updated model aims to simplify participation for influential entities like JPMorgan and Goldman Sachs, enabling them to access the ETF using cash rather than handling cryptocurrencies directly. This bold move is a response to regulatory hurdles preventing these institutions from holding Bitcoin directly on their balance sheets.

Read More: BlackRock and Bitwise Revamp Bitcoin Spot ETF Applications as SEC Approval Looms

Banks have it easier now!

Under the revamped model, BlackRock’s ETF proposal streamlines access for banks. Authorized Participants (APs) transfer cash to a broker-dealer, which subsequently converts it into Bitcoin. The digital assets are then securely stored by the ETF’s custody provider, Coinbase Custody in BlackRock’s case.

This bold restructuring aims to mitigate risks for APs while shifting them to market makers, emphasizing BlackRock’s commitment to fortifying investor protection, reducing transaction costs, and enhancing operational efficiency within the Bitcoin ETF ecosystem. Sounds great, right?

Countdown to Decision Day

BlackRock’s recent engagements with the SEC, including a third meeting on December 11, underscore the urgency surrounding the forthcoming decision. The SEC faces a crucial deadline to decide on BlackRock’s application by January 15, with a final cut-off on March 15.

The clock is already ticking and Industry analysts eagerly await the SEC’s expected ruling on several spot Bitcoin ETF applications between January 5-10. Should BlackRock receive the green light, it could reshape the crypto landscape, providing a smoother avenue for traditional financial institutions to enter this burgeoning market.

Also Read: Bitcoin Spot ETF: Anthony Scaramucci Predicts January Approval for “Digital Gold”

What’s Next for the Industry?

As the world awaits BlackRock’s fate, there’s newfound hope for SEC approval of spot Bitcoin ETFs, potentially transforming the digital assets sector by attracting more retail investors. Until now, market-making firms like Jane Street, Jump Trading, and Virtu were expected to be major participants. But with banks now entering the picture, it could expand the number of liquidity providers. This change might give banks a share in the action. 

Delays Might Still Be Possible!

As per schedule, Bitcoin ETFs might get SEC approval by January’s end, but Bloomberg’s ETF analyst James Seyffart suggests a potential delay in their actual listing. Seyffart hints at uncertainty, indicating a possible gap between approval and public listing, extending beyond the initial approval period.