BlackRock files with the SEC to launch spot Bitcoin ETF
Larry Fink, the CEO of BlackRock called Bitcoin an “index of money-laundering” and claimed his clients “had zero interest in crypto”.
The mood is changing in TradFi and the world’s largest asset manager filed with the US regulator to launch a spot Bitcoin Exchange Traded Fund (ETF)!
I have read the whole application in detail — so you don’t have to — and here is what you need to know about BlackRock’s Bitcoin ETF.
First, to clarify BlackRock actually filed an application to launch a Trust, but I want to explain that for all practical purposes, the product is an ETF.
“iShares Bitcoin Trust” will continuously issue & redeem shares, only in blocks of 40,000 (Bitcoins worth $1mil). You receive Bitcoins at the Net Asset Value (NAV) of the Trust, by redeeming the shares.
Only registered broker-dealers who are “authorized participants” will be able to purchase or redeem shares of the Trust.
The public will be able to purchase iShares Bitcoin Trust on Nasdaq at the prevailing market prices.
As the saying goes “If it looks like a duck, swims like a duck, and quacks like a duck, then it is a duck”.
Like Blackrock’s iShares Bitcoin Trust — it looks like an ETF, works like an ETF, and trades like an ETF, then it is an ETF!
Coinbase is listed as the Bitcoin custodian and BNY Mellon is the cash custodian for the Trust. Coinbase Prime will be used for Bitcoin purchases.
BlackRock’s Bitcoin ETF will actually not pre-fund the transactions but will use a credit line from Coinbase Prime to execute the trades.
Many have tried & failed to get SEC approval to launch Bitcoin spot ETF. For instance, the Grayscale Bitcoin Trust (GBTC), with $15 billion in assets, has been rejected many times to convert its trust to an ETF. In all the cases, the SEC has argued the lack of market integrity and tools to mitigate market manipulation.
BlackRock is betting on Nasdaq’s surveillance-sharing agreement called the “Spot BTC SSA” for the sharing of information about the market trading activity, clearing activity, and customer identification, allowing for little possibility of market manipulation.
Lastly, reading about the risks & volatility of the crypto industry is absolutely hilarious & the application lists:
1️⃣ The collapse of the crypto shadow banking with bankruptcies of Celsius, Voyager, BlockFi, Three Arrows Capital Pte Ltd, Genesis Global, and Alameda Research
2️⃣ Mt. Gox the world’s largest crypto exchange at the time, filed for bankruptcy for losses counted in billions of $
3️⃣ Bitstamp hack of 19,000 bitcoins, Bitfinex hack of 120,000 bitcoins, Coincheck hack of $535 million, Bitgrail hack of $170 million, Binance hack of $40 million
4️⃣ FinCEN fining BTC-E for $110 million, for facilitating crimes such as drug sales and ransomware attacks,
5️⃣ FTX bankruptcy with claims of $8 billion missing.
#blackrock #etf #bitcoin #sec