New reports indicate BlackRock, the planet’s most prominent asset manager, is prepping to file an application for a Bitcoin exchange-traded fund (ETF). According to insiders, the firm aims to integrate Coinbase Custody for this venture. Also, it’s noteworthy that the ETF’s pricing will hinge on the spot market data from the same exchange.
However, representatives from both BlackRock and Coinbase have remained tight-lipped about the subject. Meanwhile, uncertainties persist about whether the ETF will focus on Bitcoin spot or futures.
#Blackrock is the world's largest Asset manager. Over 11 #Trillion USD under management! About to file for #Bitcoin ETF. Using #Coinbase as Custodian! 🥳📈🚀— Seth (@seth_fin) June 15, 2023
Don't tell me you panic sold while they panic Buy! 😅📈🌊💯 pic.twitter.com/osXiKNlGsf
Legal Hurdles Loom Ahead
The Securities and Exchange Commission (SEC) recently filed a lawsuit against Coinbase. This development raises questions about the lawsuit’s potential impact on BlackRock’s proposed ETF.
Earlier, BlackRock and Coinbase joined forces to introduce a private trust, targeting US-based institutional clientele. This trust, which launched in August, allowed clients access to spot Bitcoin through Coinbase Prime Services. The company followed it up with another private trust, providing these institutional clients direct Bitcoin exposure.
Interestingly, this private trust did not require regulatory approval before launch. This is because private trusts that don’t actively seek investments from general retail investors don’t need to register with authorities.
BlackRock’s Blockchain Ventures and the SEC
In 2022, BlackRock unveiled the iShares Blockchain and Tech ETF in the U.S. The ETF aims to trace the performance of domestic and foreign firms engaged in blockchain and cryptocurrency-related activities.
Globally, BlackRock has introduced the iShares Blockchain Technology UCITS ETF, targeting users in Europe. This ETF follows the NYSE FactSet Global Blockchain Technologies Capped index and provides exposure to blockchain and cryptocurrency companies.
However, winning the approval of the SEC for a Bitcoin-related ETF may prove challenging. The regulator has notoriously been tight-fisted with such approvals. To date, more than a dozen applications for spot Bitcoin ETFs, including those from SkyBridge, Grayscale, WisdomTree, and ARK 21Shares, have been rejected by the SEC. However, Bitcoin Futures ETFs have enjoyed more success, with seven currently approved and listed in the U.S. market.