The post BlackRock Bitcoin ETF Shifts Risk to Crypto Market Makers, Not Banks appeared on BitcoinEthereumNews.com.

BlackRock intends to make it easier for Wall Street banks to participate in its Bitcoin ETF—should it be approved—by shifting risk to crypto market makers. The plan includes a novel way for shares in the ETF to be redeemed, according to a memo the SEC shared about a late November meeting between BlackRock, Nasdaq, and the Commission. The parties met last month to discuss feedback on the asset manager’s Bitcoin ETF application. A Bitcoin ETF would enable investors in the fund to gain exposure to Bitcoin without directly buying or storing the asset—it’s eluded the U.S. market for over a decade, and most analysts expect that such a product would lead to a large influx of capital into crypto markets. The SEC has been reluctant to approve one, however, given its concerns about manipulation in Bitcoin markets. The SEC hasn’t yet made a decision on BlackRock’s iShares Bitcoin Trust (IBTC) application and, technically, doesn’t have to until January 15. But analysts have said it’s likely that the regulator will issue a decision on a handful of the existing spot Bitcoin ETF applications earlier in the month, between Monday, January 8 and Wednesday, January 10. The BlackRock-Nasdaq-SEC meeting was a follow-up to a November 20 meeting during which the securities regulator expressed some concerns over BlackRock’s model for the redemption of shares. A previous proposal outlined T+1 settlement that would begin with a broker dealer delivering IBTC shares to a transfer agent, the issuer asking the custodian (in this case, Coinbase Custody) to send Bitcoin that was backing those shares to a crypto market maker, and the market maker closing a short position in Bitcoin. For context: The T is shorthand for the date an order is placed. So a T redemption flow means an order is settled the same day…

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Filed under: News - @ December 14, 2023 6:12 am