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54 sats \ 3 replies \ @grayruby 20 May freebie \ parent \ on: BlackRock's Paper Bitcoin bitcoin
I tried to use the threadreaderapp but didn't work. Maybe you need to be a premium member for that. He was essentially saying blackrock has two accounts at coinbase a trading account which it uses to buy and sell bitcoin otc and a vault account that it custodies the bitcoin for the etf for. Vault account is with a separate entity owned by coinbase but not affiliated with the trading platform. Trading activities are not recorded on chain but transfers to and from the vault account are. The trade credits mentioned in the tweet is essentially credit extended to them by coinbase to cover the the T1 or T2 settlement blackrock has with authorized participants.
Thanks. So the credits don't need to be settled in cash for 30 days?
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Here is what he said about that part.
It's: (a) get creation order (b) borrow cash in form of trade credits (c) buy bitcoin (d) exchange cash for btc (e) btc settles into trading balance (offchain).
In a regular end-of-day sweep process, the bitcoin that was acquired in the step above gets transferred from the trading account to the "Vault Balance."
^^ this transaction is on-chain ^^ remember: transactions from the Prime entity to the Custody entity are onchain.
Once the AP that started the process delivers cash to the ETF (which I believe happens on T+1 but we'd need to ask Blackrock to be sure, could be T2) IBIT takes the cash & repays the loan to Coinbase (cash in the form of trade credits) and that leg of the txn is complete.
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