BlackRock has revised its spot Bitcoin ETF application to facilitate participation from major Wall Street institutions. The updated "prepay" model allows banks to act as authorized participants without directly holding crypto.

Under the new structure, banks would transfer cash to a broker-dealer to acquire Bitcoin on their behalf before the assets are custodied with an entity like Coinbase. This shift in mechanics is tailored to highly-regulated institutions restricted from direct custody.

BlackRock says the changes also bolster resistance to manipulation concerns long cited by the SEC in rejecting past bitcoin ETF bids. The asset manager claims additional benefits around strengthened investor protections, lower costs, and harmonization across the ETF ecosystem.

The proposal revisions follow two earlier SEC meetings on the application. BlackRock delivered the updates in a third sit-down as the firm makes its closing case prior to impending decision deadlines.

Allowing banking giants easier participation avenues without balance sheet exposure would be a potential game-changer expanding the range of players in Bitcoin investment vehicles. BlackRock continues adjustments to get ahead of issues haunting previous applicants.

With a keystone decision likely in January, asset managers sense a turning point nearing as years of futility around a Bitcoin ETF give way to measured optimism an approval wave now looms.