BlackRock Files Application For Bitcoin Spot Exchange Traded Fund

BlackRock Files Application For Bitcoin Spot Exchange Traded Fund

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The world’s largest asset manager, BlackRock, has announced that it has filed an application for a Bitcoin spot exchange-traded fund (ETF). 

If approved, BlackRock’s Bitcoin spot ETF will become the first crypto spot ETF in the United States of America. 

Details Of The Application 

News about BlackRock being close to submitting an application for a Bitcoin ETF (Exchange Traded Fund) was recently revealed by a source familiar with the matter. According to a filing by the Nasdaq stock exchange with the United States Securities and Exchange Commission (SEC), the custodian of the fund’s Bitcoin holdings would be the Coinbase Custody Trust Company. Meanwhile, the Bank of New York Mellon would hold custody of the fund’s fiat currency. 

The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust. Coinbase Custody Trust Company, LLC (the “Bitcoin Custodian”) is the custodian for the Trust’s bitcoin holdings, and Bank of New York Mellon is the custodian for the Trust’s cash holdings (the “Cash Custodian.”

The application, filed on the 15th of June, 2023, states, 

“The Shares have been designed to remove the obstacles represented by the complexities and operational burdens involved in a direct investment in Bitcoin.”

According to the filing, the Bitcoin price will be updated every 15 seconds during regular market trading through the CF Benchmarks Index. 

Previously Approved Spot Exchange Products 

The filing also noted that previously approved spot exchange-traded products in the commodities and currency markets were generally unregulated and that the commission relied on the underlying futures market as the basis for approving or rejecting trust shares in previous instances. 

“As such, the regulated market of significant size test does not require that the spot bitcoin market be regulated in order for the Commission to approve this proposal.” 

So far, the United States Securities and Exchange Commission has yet to approve a single spot Bitcoin Exchange Traded Fund despite several applications in the past. After a spate of rejections, Grayscale had filed a suit against the Securities and Exchange Commission. The investment firm had challenged the SEC’s refusal to approve Grayscale’s application for a Bitcoin spot exchange-traded fund. In its arguments, Grayscale stated, 

“The fundamental problem with the order is that it contradicts previous SEC orders giving the green light to Bitcoin futures ETPs that pose the same risk of fraud and manipulation and have in place the same CME [Chicago Mercantile Exchange] surveillance mechanism to protect against those risks.”

Others, such as Cathie Wood’s ARK Invest and European investment firm 21Shares, have also been pushing hard for their own spot Bitcoin exchange-traded fund approval, having filed their third application back in April. Canada’s Purpose Bitcoin ETF was the world’s first spot-traded Bitcoin ETF, having been set up in early 2021. 

BlackRock’s Previous Exchange-Traded Fund 

BlackRock had announced the launch of a Europe-focused exchange-traded fund in September 2022. The ETF looked to provide its European customers with greater exposure to crypto and the blockchain ecosystem. Other reports at the time also indicated a metaverse-focused ETF was also in the pipeline. The ETF was called the iShares Blockchain Technology UCITS ETF and had around 75% of its holdings consisting of exchanges and blockchain companies. The remaining 25% was made up of companies that supported the larger blockchain ecosystem. 

The ETF gave BlackRock’s European customers to several major companies in crypto, including Galaxy Digital, Marathon Digital, and Coinbase. Furthermore, the biggest holdings in the fund included USD Cash (13%), Block (11.40%), Coinbase (13.20%), Riot Blockchain (10.50%), and Marathon Digital Holdings.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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