• BlackRock, the world’s largest asset manager, has recently submitted a request for a Bitcoin exchange-traded fund (ETF).
• The proposed iShares Bitcoin Trust by BlackRock will entrust Coinbase Custody with its custodial duties.
• Regulatory approval of this ETF remains uncertain as the SEC has not yet approved any applications concerning spot bitcoin ETFs.
BlackRock’s Bitcoin Proposal
BlackRock, the largest asset manager globally, has recently submitted a request for a Bitcoin exchange-traded fund (ETF) to allow investors to engage with the cryptocurrency amid increased regulatory scrutiny surrounding this asset class. The proposed iShares Bitcoin Trust by BlackRock will entrust Coinbase Custody with its custodial duties, as indicated in the filing made with the U.S. Securities and Exchange Commission (SEC).
Regulatory Approval Uncertainty
Currently, the SEC has not granted approval for any applications concerning spot bitcoin ETFs. In the past, the SEC turned down the request by Grayscale Investment LLC to convert their flagship spot Grayscale Bitcoin Trust (GBTC.PK) into an ETF. In response, Grayscale filed a lawsuit against the SEC, alleging arbitrary rejection of spot bitcoin ETF applications despite prior approval of bitcoin futures ETFs. Furthermore, proposals for spot bitcoin ETFs from notable firms such as Fidelity, Cboe Global Markets, and NYDIG have all been rejected by the SEC.
Difference Between an ETF and a Trust
What sets apart a BlackRock Bitcoin ETF from a BlackRock Bitcoin trust? An ETF can be traded on a stock exchange whereas trusts do not possess this feature; consequently offering higher liquidity than trusts which facilitates easier buying and selling of shares for investors. Additionally an ETF would be subjected to regulation providing more transparency and reducing risk compared to a trust option.
Controversy Surrounding Classification
Do you consider $GLD to be an ETF? Well it is same thing as what is proposed by Blackrock – lots of structures under “ETF” umbrella – nothing like $GBTC – This is real deal according Eric Balchunas from Twitter who posted about this potential investment opportunity on June 16th 2023 at 3pm GMT .
The SEC has yet to approve any Spot Bitcoin EFT applications but if accepted it would likely provide more appealing options for investors than investing through trusts due its higher liquidity facilitated through trading on stock exchanges as well as being more regulated leading too greater transparency and reduced risk associated with investments within this market sector