BlackRock, the world’s largest asset manager with $10 trillion in assets under management, has filed with the Securities and Exchange Commission (SEC) to launch a Bitcoin Spot ETF (exchange-traded fund). This product, which has yet to see the light of day in the United States, could potentially revolutionize the accessibility and adoption of Bitcoin among investors.
Partnering with Coinbase, a leading American cryptocurrency exchange, BlackRock plans to utilize their custody services for the Bitcoin that will back the ETF, building upon their previous collaboration in launching a Bitcoin trading service last year.
The iShares Bitcoin Trust, as the ETF is named, aims to provide investors with easy access to Bitcoin, leveraging the expertise and reputation of BlackRock as a Wall Street giant. The filing states that the Trust seeks to reflect the performance of Bitcoin’s price, with its assets primarily consisting of Bitcoin held by the Bitcoin Custodian on behalf of the Trust.
Can BlackRock Succeed Where Others Have Failed?
Unlike other firms that have attempted to launch similar products in the past, only to face continuous denials from the SEC, BlackRock’s entry into the Bitcoin Spot ETF space brings significant weight and influence. It is worth noting that the SEC has previously approved Bitcoin Futures ETFs, which are backed by Bitcoin futures contracts rather than the actual cryptocurrency itself.
The agency favors these futures-based products due to the surveillance conducted by the Chicago Mercantile Exchange (CME) to detect and prevent market manipulation.
Grayscale, a prominent crypto asset management firm, had its spot ETF proposal rejected last year due to its surveillance-sharing agreement with the CME Bitcoin Futures market, which the SEC deemed not closely related enough to the spot Bitcoin market. This decision resulted in Grayscale suing the SEC, and judges overseeing the case have expressed skepticism over the regulator’s argument.
Meanwhile, BlackRock has outlined its approach to determining the value of the Bitcoin held in its trust, referencing the CF Benchmarks Index. This index tracks Bitcoin prices across reputable exchanges such as Coinbase, Bitstamp, iBit, Kraken, Gemini, and LMAX Digital, aiming to resist manipulation and exclude any futures prices from its methodology.
While the road ahead may still be challenging, as ETFs typically face heavy resistance and extensive scrutiny from the SEC, BlackRock’s reputation and influence in the financial industry could potentially sway the decision in favor of the ETF.