This world-leading asset manager wants to launch in the US a bitcoin spot product, something that scores of competitors have attempted and failed to do.
BlackRock’s iShares Bitcoin Trust, whose assets totaled $9.1 billion through the end of March, was announced in a SEC filing on Thursday.
Coinbase will be the custodian for the bitcoins held by the trust, until the SEC approves the product. The SEC sued the crypto exchange last week for allegedly operating as an unregistered exchange — a charge the company has denied.
BlackRock partnered with Coinbase last August, connecting the fund group’s investment platform, Aladdin, with Coinbase Prime — extending crypto trading, custody, prime brokerage and reporting capabilities to BlackRock clients.
The product planned would be based on a bitcoin benchmark rate collected by CF Benchmarks. Kraken is a subsidiary of CF Benchmarks that gathers exchange price data to continuously track spot prices.
“An estimated 20% of Americans have now owned bitcoin at some point,” Sui Chung, CEO of CF Benchmarks said this in a press release. “BlackRock’s proposed ETF potentially offers the other 80% an option that is altogether more familiar and accessible.”
Since years, fund issuers tried to launch bitcoin spot ETFs on the US market.
Although regulators of other countries have approved products that directly invest in bitcoin (BTC), the SEC has blocked them due to concerns about market manipulation.
ETFs which invest in bitcoin contracts for futures have been permitted to enter the market by regulators.
Grayscale Investments sued the SEC in 2013 after the SEC refused to allow the company to convert the flagship Bitcoin Trust, GBTC, into an ETF. The firm noted that these approvals made the SEC’s refusal of a bitcoin spot ETF, at least partially, invalid. “arbitrary and capricious.”
David Hirsch of the SEC’s Division of Enforcement’s Crypto Asset and Cyber Unit said that at a recent conference, prospective issuers of spot Bitcoin ETFs had not yet established there was a market for the product. “an adequate system of surveillance” Trading on an exchange is comparable.
BlackRock released its iShares and blockchain tech ETF (IBLC), launched prior to the linkup with Coinbase in April 2020, when it was still a BlackRock product.
IBLC’s assets under management sit at a scant $7 million after more than a year on the market — despite the fund being up 75% year to date.
BlackRock CEO Larry Fink also showed his optimism in the underlying technology of crypto over the last year. He said at a New York Times Summit held last November, that tokenizing securities was a good idea. “the next generation for markets.”
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