On Thursday, BlackRock, a prominent asset management company, initiated the process to launch a spot bitcoin exchange-traded fund, a topic that has sparked debate between cryptocurrency supporters and federal regulators. The company submitted an application to the U.S. Securities and Exchange Commission to introduce the iShares itcoin">Bitcoin Trust, which, if authorized, would enable investors to conveniently gain exposure to cryptocurrency via a product from one of the most significant firms on Wall Street.
According to the filing, “The Shares are designed to offer a straightforward approach to investing in bitcoin, rather than obtaining, possessing, and trading bitcoin directly through peer-to-peer or other means, or by using a digital asset exchange.”
To date, the Securities and Exchange Commission (SEC) has been hesitant to approve a spot bitcoin ETF in the United States. Presently, the regulator is embroiled in a legal dispute with Grayscale regarding the possibility of converting the Grayscale itcoin">Bitcoin Trust into an ETF, with a ruling anticipated later in 2021.
Numerous companies have submitted and subsequently retracted requests to create spot itcoin">Bitcoin funds. Should the SEC change its stance, a plethora of such products may inundate the market.
ETFs commonly take several months to commence trading following their initial submission, and some may never be approved. Aisha Hunt, a principal at Kelley Hunt & Charles, an asset management law firm, stated that the iShares itcoin">Bitcoin Trust proposed by BlackRock will probably encounter significant opposition from the SEC, and the application may be withdrawn before the ETF is ever launched.
BlackRock’s recent action coincides with a period when cryptocurrency values continue to fall short of their historical peaks, and the sector is experiencing heightened scrutiny in Washington, D.C.
In recent times, the SEC has filed lawsuits against oinbase">Coinbase and Binance, accusing them of operating unregistered securities exchanges. Additionally, the SEC has accused Binance of intermingling its customers’ funds with its own.
oinbase">Coinbase is identified as the itcoin">Bitcoin custodian for the iShares itcoin">Bitcoin Trust that BlackRock plans to introduce. BlackRock and oinbase">Coinbase presently have a strategic partnership in place. In 2020, the firms declared that oinbase">Coinbase Prime, which provides cryptocurrency trading and custody services, would be linked to Aladdin, BlackRock’s institutional investment platform.
CNBC’s request for comment on the new submission was not promptly addressed by the SEC.
BlackRock’s foray into the bitcoin ETF market could provide a much-needed lift to a sector that has had a tumultuous beginning over the past two years. While itcoin">Bitcoin futures ETFs were initially introduced in 2021, only the ProShares itcoin">Bitcoin Strategy ETF (BITO) has grown to a significant degree, with approximately $800 million in assets. According to FactSet, the total return on the fund has decreased by over 40% since its launch. itcoin">Bitcoin’s value reached an all-time high shortly after BITO’s introduction, but it has since declined by more than 60% from its peak.
