BlackRock’s Bitcoin ETF seeks participation from Wall Street banks | CoinDesk JAPAN

Wall Street banks, which are subject to restrictions on holding crypto assets, will play an important role due to changes in the structure of Bitcoin spot ETFs (Exchange Traded Funds) proposed by BlackRock, the world’s largest asset management company. A path will be opened to accomplish this.

BlackRock recently enabled authorized participants (APs), a key part of the ETF ecosystem, to issue new funds in cash as well as crypto assets.

Because American banks are subject to strict regulations and are not allowed to hold Bitcoin themselves, this setting puts companies such as JPMorgan and Goldman Sachs, which have some of the world’s largest balance sheets, in the black market. It will be possible to act as an AP for rock ETFs (whether these companies want to do so is another matter).

The cash used by AP in this process is converted into Bitcoin by an intermediary and exchanged for ETFs, according to filings related to a Nov. 28 meeting attended by the U.S. Securities and Exchange Commission (SEC), BlackRock, and Nasdaq. Stored by the custody provider.

Until now, the view was that AP would become something other than a bank.

There is growing optimism that a Bitcoin spot ETF will soon be approved by the SEC, and could be a game-changer for the digital asset industry if it attracts large amounts of capital from retail investors. The general view is that AP is not a bank, but rather a large market company with experience in dealing with crypto assets, such as Jane Street, Jump Trading, and Virtu Financial. It was thought that it would become a making company. But the changes mean banks could potentially get a slice of the move, widening the hierarchy of liquidity providers.

“If the SEC approves this revised two-pronged model of cash and in-kind issuance and redemption, it will mean increased liquidity to support ETFs during trading,” Sui Zhang, CEO of CF Benchmarks, said in an interview. “The reason for that is obviously because there are more potential APs as part of the process.” (acting as the administrator of the benchmark). “While trading firms such as Jane Street are large and professional, they fundamentally do not have the multitrillion-dollar positive balance sheets that America’s largest banks have.”

｜Translation and editing: Rinan Hayashi
｜Image: Shutterstock
｜Original text: BlackRock’s Bitcoin ETF Now Invites Participation From Wall Street Banks