Analysis: BlackRock Spot Bitcoin ETF supports cash subscriptions or helps traditional institutions participate

Under BlackRock’s recent revisions to the redemption model for its Bitcoin spot ETF, authorized participants will be able to subscribe for new fund shares with cash, not just cryptocurrency. Since heavily regulated U.S. banks cannot hold Bitcoin themselves, this setup could allow financial giants such as JPMorgan Chase and Goldman Sachs to become authorized participants in the BlackRock ETF. (CoinDesk) According to previous news, memos showed that companies such as BlackRock and Fidelity met with the US SEC in the past few weeks to discuss the redemption process of Bitcoin spot ETFs. The issue discussed lies in three separate models (cash/in-kind/revised in-kind redemption model) to determine which entity must sell Bitcoin if an investor wants to redeem a share of the underlying asset. Fidelity seems inclined to stick with the physical redemption model for the Bitcoin Spot ETF, while the SEC may favor a cash model. Vivian Fang, a finance professor at Indiana University, said BlackRock's revised redemption model may be enough to satisfy the SEC's requirements. From an investor's perspective, there is no difference between the cash model and the revised physical model. Regardless of which model is adopted, investors will still receive cash back when redeeming their shares. BlackRock’s revised plan will not require asset managers to immediately liquidate Bitcoin holdings on demand, will reduce the impact of large collective redemptions on ETFs, and allow for more flexibility in managing portfolios without incurring capital gains taxes. .