Blackrock, the world’s largest asset manager, has filed to register a bitcoin trust that some believe is actually a spot bitcoin exchange-traded fund (ETF) in disguise. Blackrock is seeking to launch a bitcoin product despite the U.S. Securities and Exchange Commission’s (SEC) efforts to crack down on unregistered crypto platforms and securities tokens. The asset management firm has also chosen Coinbase, the Nasdaq-listed crypto exchange that was recently charged by the SEC for securities law violations, to serve as custodian for its bitcoin trust.
Blackrock Files to Launch a Bitcoin Trust
The world’s largest asset manager, Blackrock, filed for the registration of Ishares Bitcoin Trust (the Trust) with the U.S. Securities and Exchange Commission (SEC) on Thursday despite the regulator’s ongoing regulatory crackdown on the cryptocurrency sector. According to Blackrock’s filing:
The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust. The Trust seeks to reflect generally the performance of the price of bitcoin.
“The Trust was formed as a Delaware statutory trust on June 8,” the asset manager explained, adding that Blackrock Fund Advisors is the trustee of the Trust and Coinbase Custody Trust Company is the custodian for the Trust’s bitcoin holdings. The sponsor of the Trust is Ishares Delaware Trust Sponsor, a Delaware limited liability company and an indirect subsidiary of Blackrock Inc.
“The Trust issues shares only in baskets of 40,000 or integral multiples thereof,” the filing further details, adding: “Baskets may be redeemed by the Trust in exchange for the amount of bitcoin corresponding to their redemption value.” Moreover, Blackrock stated:
Individual shares will not be redeemed by the Trust but will be listed and traded on Nasdaq.
Many people view Blackrock’s filing as bullish for the entire crypto sector. Some have argued that the largest asset manager’s filing for a bitcoin trust is actually a filing for a bitcoin exchange-traded fund (ETF), which the SEC has not yet approved. So far, the securities regulator has rejected all filings for spot bitcoin ETFs.
Some people were also surprised that Blackrock is seeking to offer a bitcoin product using Coinbase as custodian when the SEC is cracking down on the crypto industry and has filed charges against Coinbase for securities law violations. Onchain Capital co-founder Ran Neuner tweeted:
Did Blackrock really just apply for a spot bitcoin ETF using Coinbase, a U.S. company that the SEC claims is actually an unlicensed securities exchange operating illegally?
Several individuals drew comparisons between Blackrock’s bitcoin trust and Grayscale’s bitcoin trust (GBTC). Grayscale has been actively seeking to convert its bitcoin trust into a bitcoin ETF but the SEC has rejected its filing so far.
Digibuild CEO Robert Salvador opined: “This is no different than the Grayscale. This can be used to short bitcoin into the floor. This is a Trojan horse, not a real ETF. Don’t be lulled to sleep.” Cardano enthusiast Chris O described: “Blackrock is a trust, but you can redeem it, so effectively working the same as an outright spot ETF. Probably packaged this way to justify their undoubted approval.”
Eric Balchunas, a senior ETF analyst for Bloomberg, explained: “To all those saying the Blackrock filing is a trust and not an ETF. Do you consider $GLD to be an ETF? Well, this is same thing. Lot of structures under ‘ETF’ umbrella. Nothing like $GBTC. This is the real deal.” He stressed:
Yes, it is a trust, but so is every other physical commodity ETFs like $GLD. Same structure. This is a real deal spot ETF filing vs GBTC.
Venture Coinist’s Luke Martin noted: “$SPY & $GLD are good comparisons here. Both are ETFs structured as trusts. Same thing here. Key difference is it’s redeemable. unlike $GBTC.”
Congressman Patrick McHenry (R-NC), who has been pushing SEC Chairman Gary Gensler to provide regulatory clarity for the crypto sector and has repeatedly criticized him for his enforcement-centric approach to regulating the crypto sector, emphasized: “The SEC must not pick winners and losers based on inconsistent factors. I’ll be watching this closely.” Vaneck advisor Gabor Gurbacs tweeted: “There are/were a number of earlier spot bitcoin ETF applications. Approve the active filings in order of first filing. That would be fair. But who are we kidding to expect fairness?”
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