The iShares unit of BlackRock, the world’s largest asset manager with over $10 trillion in assets under management (AUM), has filed paperwork with the U.S. Securities and Exchange Commission (SEC) for the formation of a spot bitcoin exchange-traded fund (ETF).
The fund is named the iShares Bitcoin Trust and will primarily hold bitcoin assets held by a custodian on behalf of the trust. The chosen custodian is Coinbase, with the trust being benchmarked against the CME CF Bitcoin Reference Rate.
Despite growing interest in cryptocurrencies among asset managers, the Securities and Exchange Commission (SEC) has rejected every application for a spot bitcoin ETF to date, citing concerns over market manipulation and volatility. However, the agency has approved several bitcoin futures ETFs for trading.
While futures-linked ETFs have been approved by the SEC, analysts believe a spot ETF would have a much more significant impact on the price of bitcoin. It remains to be seen whether the SEC will approve BlackRock’s ETF application – a decision that could have far-reaching implications for the cryptocurrency market.
Will the SEC Approve?
It is worth mentioning that the SEC has previously denied every application for a spot bitcoin ETF, whereas it has approved several bitcoin futures ETFs for trading. However, given BlackRock’s stature and political power, the company may be difficult for the SEC to turn away.
Another point of interest would be the choice of Coinbase as a custodian for the trust. The San Francisco-based crypto exchange is facing a lawsuit by the SEC regarding the nature of assets listed on its platform.
Prior to the regulatory action against Coinbase, BlackRock had already collaborated with the exchange to make cryptocurrencies directly available to institutional investors. Hence, the latest partnership with a Spot Bitcoin ETF in focus continues the synergy.
BlackRock’s Crypto Push
BlackRock has been a long-time admirer of crypto. The company started exploring the potential of cryptocurrencies and blockchain in 2018 when it established a working group to study emerging technology.
The asset manager demonstrated increasing interest in digital assets by trading Bitcoin CME futures in 2021, as disclosed in a filing with the U.S. Securities and Exchange Commission (SEC). It also filed for an ETF that tracks blockchain technology earlier last year.
As Coinfomania reported in September, BlackRock launched a ETF dubbed iShares Blockchain Technology UCITS ETF (BLKC) to attract European investors. The company has demonstrated an increasing willingness to embrace cryptocurrencies as part of its investment portfolio through these and other steps.
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