BlackRock's proposed Bitcoin spot ETF mechanism will allow banks to create new fund shares in cash

According to a memorandum document related to the meeting between the U.S. Securities and Exchange Commission, BlackRock, and Nasdaq on November 28th, BlackRock's proposed Bitcoin spot ETF mechanism will allow Authorized Participants (APs) to create new fund shares using cash instead of just cryptocurrencies.

Since regulated U.S. banks themselves cannot hold Bitcoin, this arrangement would make companies like JPMorgan Chase or Goldman Sachs become APs for BlackRock's ETF. The cash used by APs in this process can be exchanged into Bitcoin through intermediaries and then held in custody by the ETF's custodian provider.