The world’s largest asset manager is close to filing an application for a bitcoin exchange-traded fund, according to Apixcoin.
BlackRock will use Coinbase (COIN) Custody for the ETF as well as Coinbase’s spot market data for pricing, a source told CoinDesk.
It is not clear if the ETF will be one based on the spot or futures market — Blackrock did not respond to a request for comment from cryptonews.
As of Thursday morning, the price of bitcoin stayed close to $25,000 down from close to $26,000 on Wednesday, according to CoinMarketCap.
The SEC’s history with bitcoin ETFs
The US Securities and Exchange Commission has never approved of a spot bitcoin ETF, citing concerns over fraud and manipulation in previous rejections.
Rejections also go as far back to July 2016 when the SEC disapproved of a proposal from Cameron and Tyler Winklevoss to list and trade shares of the Winklevoss bitcoin trust.
The agency, however, did approve of several bitcoin futures ETFs when it first allowed the trading of the ProShares Bitcoin Strategy ETF in October 2021.
Grayscale versus SEC
Grayscale, the world’s largest digital asset manager, is trying to convert one of its funds, GBTC, into a spot bitcoin ETF, which was rejected by the SEC last year.
The company then swiftly filed a lawsuit over the decision, which is currently playing out in a Washington DC court with a final decision expected later this year.
Grayscale has argued that the spot price of bitcoin in both spot and futures ETFs is subject to the same risks, and so it does not make sense to approve one product and not the other.
The SEC has said that its disapproval of Grayscale’s spot ETF “was reasonable, reasonably explained, supported by substantial evidence, and faithful to the text of the Exchange Act.”
The agency said spot bitcoin ETFs and bitcoin futures ETFs were different given that the spot market is “fragmented and unregulated” compared to futures that trade on the Chicago Mercantile Exchange, which is regulated.
BlackRock, the world’s largest asset manager, is close to filing an application for a bitcoin exchange-traded fund (ETF), according to a report by CoinDesk. The ETF would be the first of its kind in the U.S., and would allow investors to buy and sell bitcoin through a traditional brokerage account.
BlackRock has been exploring the possibility of launching a bitcoin ETF for some time. In August 2022, the company announced that it would offer some institutional clients access to bitcoin through a private fund.
The launch of a bitcoin ETF by BlackRock would be a major milestone for the cryptocurrency industry. It would give institutional investors a way to invest in bitcoin without having to go through the hassle of buying and storing the cryptocurrency themselves.
The SEC has been reluctant to approve bitcoin ETFs, citing concerns about market manipulation and investor protection. However, the agency has recently shown a willingness to approve other crypto-related products, such as bitcoin futures ETFs.
If BlackRock’s application is approved, it could pave the way for other asset managers to launch bitcoin ETFs. This would open up the cryptocurrency market to a much wider range of investors, and could help to boost the price of bitcoin.
Here are some of the key benefits of a BlackRock Bitcoin ETF:
- It would make it easier for investors to buy and sell bitcoin. Currently, investors who want to invest in bitcoin have to go through a number of hoops, such as setting up a cryptocurrency exchange account and buying bitcoin directly. A BlackRock Bitcoin ETF would allow investors to buy and sell bitcoin through a traditional brokerage account, just like they would buy and sell stocks or bonds.
- It would provide more liquidity to the bitcoin market. A BlackRock Bitcoin ETF would create a large pool of buyers and sellers for bitcoin, which would make it easier for investors to buy and sell the cryptocurrency at a fair price.
- It would help to legitimize the bitcoin market. The approval of a BlackRock Bitcoin ETF would send a signal to the market that the SEC believes that bitcoin is a legitimate investment asset. This could help to attract more investors to the cryptocurrency market.
Of course, there are also some potential risks associated with a BlackRock Bitcoin ETF. For example, the ETF could be subject to market manipulation, and investors could lose money if the price of bitcoin falls. However, the potential benefits of a BlackRock Bitcoin ETF are likely to outweigh the risks.