Understanding BlackRock’s Bitcoin Proposal: ETF, Trust, or Something Else?

BlackRock, the world’s largest asset manager, files for a bitcoin ETF amid regulatory scrutiny and industry competition.

Man watching huge Bitcoin float with black rocks in his tech lair.
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  • BlackRock has filed for a Bitcoin ETF.
  • BlackRock has strategically positioned itself in the evolving cryptocurrency market.
  • Regulatory approval for BlackRock’s Bitcoin ETF filing remains uncertain.

BlackRock, the largest asset manager globally, has recently submitted a request for a Bitcoin exchange-traded fund (ETF) to allow investors to engage with the cryptocurrency amid increased regulatory scrutiny surrounding this asset class.

The proposed iShares Bitcoin Trust by BlackRock will entrust Coinbase Custody with its custodial duties, as indicated in the filing made with the U.S. Securities and Exchange Commission (SEC). Currently, the SEC has not granted approval for any applications concerning spot bitcoin ETFs.

In the past, the SEC turned down the request by Grayscale Investment LLC to convert their flagship spot Grayscale Bitcoin Trust (GBTC.PK) into an ETF. In response, Grayscale filed a lawsuit against the SEC, alleging arbitrary rejection of spot bitcoin ETF applications despite prior approval of bitcoin futures ETFs.

Furthermore, the SEC has rejected proposals for spot bitcoin ETFs from notable firms such as Fidelity, Cboe Global Markets, and NYDIG.

Controversy Surrounds Classification: Is It a Genuine ETF or a Trust?

What sets apart a BlackRock Bitcoin ETF from a BlackRock Bitcoin trust?

An ETF can be traded on a stock exchange, whereas a trust does not possess this feature. Consequently, an ETF offers higher liquidity than a trust, facilitating the buying and selling of shares for investors.

Additionally, an ETF would be subjected to the same regulatory framework as other ETFs, enhancing transparency and reducing risk compared to a trust.

A BlackRock Bitcoin ETF would likely be a more appealing investment option for most investors than a BlackRock Bitcoin trust. However, it is essential to acknowledge that the SEC has yet to approve any Bitcoin ETFs. Consequently, there remains the possibility of the denial of BlackRock’s application.

On the Flipside

  • The SEC’s track record of rejecting spot bitcoin ETF proposals indicates a significant barrier to entry for BlackRock’s application, raising doubts about its eventual approval.
  • A contrasting viewpoint suggests that a BlackRock Bitcoin trust could offer investors more flexibility and control over their investment, as it would not be traded on a stock exchange.
  • Even if the SEC approves a Bitcoin ETF, it may not necessarily guarantee mainstream adoption or success.

Why This Matters

BlackRock’s filing for a bitcoin ETF could pave the way for broader institutional investor participation in the cryptocurrency market, potentially increasing liquidity and mainstream acceptance of digital assets.

To learn more about Charles Hoskinson’s criticism of Bitcoiners supporting the BlackRock ETF, read here:

Cardano’s Charles Hoskinson Blasts Bitcoiners Supporting BlackRock’s ETF

To stay updated on Ripple’s ambitious CBDC platform empowered by the Colombian Central Bank, read here:

Ripple’s Ambitious CBDC Platform Empowered by Colombian Central Bank 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.