In a significant development, BlackRock, the world’s largest asset manager, has submitted an application to the US Securities and Exchange Commission (SEC) seeking approval for its iShares Bitcoin (BTC) Trust slated for listing and trading on the Nasdaq stock exchange.
Previous applications for Bitcoin ETFs have faced rejection by the SEC, mainly due to concerns surrounding potential market manipulation linked to Bitcoin prices. To address this particular concern, BlackRock has forged a partnership with Nasdaq, entering into a surveillance-sharing agreement with an operator of a spot trading platform for BTC.
The iShares BTC Trust, as filed by BlackRock, stands out from other proposed BTC ETFs in several key aspects. The trust will be issued by a Delaware statutory trust and will operate under a trust agreement involving BlackRock, the Trustee, and a Delaware Trustee. This structure differs from other Bitcoin ETFs that have typically been structured as investment trusts.
Moreover, the iShares BTC Trust will primarily hold Bitcoin, with Coinbase Custody Trust Company serving as the custodian for its BTC holdings. Notably, this custodian is also used by the largest BTC investment trust, Grayscale Bitcoin Trust. In contrast, some other proposed Bitcoin ETFs have planned to utilize different custodians or even directly hold Bitcoin.
Bitcoin Bridging Exposure In Public Securities Market
The investment objective of the iShares Bitcoin Trust is to mirror the performance of BTC’s price, taking into account the Trust’s expenses and liabilities. The Shares aim to offer investors an alternative avenue to gain investment exposure to BTC through the public securities market. This objective aligns with that of other proposed BTC ETFs but differs from the Grayscale BTC Trust, which operates as a private placement available exclusively to accredited investors.
While it remains uncertain whether the SEC will approve BlackRock’s iShares BTC Trust, given the historical caution surrounding Bitcoin ETFs due to market manipulation and regulatory concerns, BlackRock’s partnership with Nasdaq to address market manipulation concerns may enhance the chances of approval. The surveillance-sharing agreement with a spot trading platform operator for BTC aims to provide the SEC with better visibility into the BTC market and reduce the potential for market manipulation.
BlackRock boasts an impressive track record of successfully obtaining ETF approvals from the SEC, with a success rate of 575-1, according to Bloomberg’s senior ETF analyst Eric Balchunas. Out of the 576 ETFs filed by BlackRock, only one has been rejected. This achievement highlights BlackRock’s expertise in navigating the complex regulatory landscape and creating investment products that meet the SEC’s stringent standards.
Moreover, BlackRock’s esteemed standing as a reputable and established entity in the financial sector, along with its proven history of successfully introducing investment products, could foster enhanced assurance within the SEC regarding the company’s competence in handling the risks inherent to a BTC ETF.
If approved, BlackRock’s move would represent a significant stride toward regulatory acceptance of a Bitcoin ETF in the US. The iShares BTC Trust would become the first Bitcoin ETF listed on a US exchange.
Ultimately, the decision to approve or reject BlackRock’s application for the iShares BTC Trust lies with the SEC. However, given the increasing interest in cryptocurrencies and the growing demand for regulated investment products offering BTC exposure, the SEC may be receptive to approving BlackRock’s application.