The BlackRock Bitcoin ETF Application Sparks a Wave of New Filings as Bitcoin Passes the $30,000 Mark
BlackRock, which managed $9.5 trillion in assets during the first quarter of 2023, is collaborating with Coinbase, the largest cryptocurrency exchange in the United States.
BlackRock, the largest asset manager globally has been in the headlines after it submitted an application to the United States Securities and Exchange Commission (SEC) to register a Bitcoin exchange-traded fund (ETF).
Following this application, atleast two investment firms have made similar filings for spot Bitcoin ETFs. These include:
WisdomTree Spot Bitcoin ETF
Invesco Spot Bitcoin ETF
Following these developments, Bitcoin has crossed $30,000 mark and hit the 50% dominance for the first time since April 2021.
Reports indicate that Blackrock’s application stands a better chance of approval compared to previous attempts to launch Bitcoin ETFs thanks to the promise of a ‘surveillance-sharing agreement’ between exchanges. To mitigate against market manipulation, Nasdaq (where the proposed ETF will be listed) will be brought in to enter into a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin.
BlackRock, which managed $9.5 trillion in assets during the first quarter of 2023, is collaborating with Coinbase, the largest cryptocurrency exchange in the United States. As part of their partnership, BlackRock’s proposed ETF would utilize Coinbase Custody for custody services, relying on the exchange’s spot market data for pricing.
Additionally, BNY Mellon has been designated as the cash custodian for the ETF.
Last August 2022, BlackRock entered into a partnership with Coinbase to provide clients using BlackRock’s investment management platform, Aladdin, with the ability to hold and trade digital assets, beginning with Bitcoin. Through this agreement, BlackRock clients gained access to Coinbase’s comprehensive suite of services, including trading, custody, prime brokerage, and reporting services related to digital assets.
This collaboration expanded BlackRock’s offerings and allowed its clients to engage in the growing market of cryptocurrencies.
Obtaining approval for a Bitcoin ETF involving spot market trading has proven to be challenging as the Securities and Exchange Commission (SEC) has raised concerns about potential fraud or manipulation in this market. Thus far, no application for a spot Bitcoin ETF has been approved by the SEC. However, the SEC has granted approval for four Bitcoin ETFs focused on futures trading.
An ETF, or exchange-traded fund, is an investment product that is linked to various assets such as commodities, currencies, stocks, or bonds. It offers investors the opportunity to gain exposure to these assets without actually owning them directly.
In the case of a Bitcoin ETF, it enables investors to invest in Bitcoin, the oldest and largest cryptocurrency, without the need to hold the digital asset themselves. Instead, investors can purchase shares of the ETF, which track the price movements of Bitcoin, allowing them to participate in its potential gains or losses. This provides a more convenient and accessible way for investors to engage with Bitcoin as an investment vehicle.
