BlackRock recently filed an application with the Securities and Exchange Commission for a Bitcoin ETF.
While some might assume that this ETF will resemble the Grayscale Bitcoin Trust (GBTC), there are notable differences between the two products.
for iShares Trust from BlackRock GBTC
BlackRock’s iShares product, which is technically classified as a credit, offers refunds similar to ETFs, unlike GBTC.
Noelle Acheson explains that the market may mistakenly associate “trust” with GBTC’s lack of redemption options, but that does not apply to BlackRock’s offering.
Image: Forbes
The main difference between a BTC ETF and a Trust is the ETF’s ability to buy bitcoin at the end of the trading day to match the fund’s assets to its trading price.
On the other hand, a trust operates with a fixed portfolio and lacks the flexibility to adjust its holdings.
Thus, trusts often trade at varying premiums or discounts compared to the value of their underlying assets.
Grayscale Argument and SEC Response
The company initiated legal action after the SEC denied the transfer.
This lawsuit is unfolding in a Washington, D.C., court, and a final ruling is expected later this year.
Grayscale made his argument, arguing that both spot and futures ETFs carry similar risks in relation to the price of Bitcoin.
BTCUSD retakes the $26K territory. Chart: TradingView.com
In response, the SEC stated that its rejection of Grayscale’s spot ETF was justified, appropriately construed, substantiated, and following the provisions of the Exchange Act.
BlackRock Spot Bitcoin Fund
BlackRock has revealed its approach to pricing its Bitcoin spot fund, which will be based on the CF CME Bitcoin Reference Rate.
This rate is derived from the combined notional value of bitcoin traded across major exchanges.
By implementing this method, the investment firm aims to address some of the concerns raised by the SEC.
To protect the iShares Bitcoin Trust, it has chosen BlackRock Custody as its custodian.
The trust will be listed on NASDAQ, providing investors with an accessible entry point into the bitcoin market.
It is worth highlighting Black stonethe world’s largest financial manager with $9.1 trillion in assets under management as of the first quarter of this year, carries significant weight in the financial industry.
This influential position indicates that the SEC is unlikely to easily reject BlackRock’s application.
As cryptocurrency market analyst Joe Consorte noted in a recent tweet, “given its reputation, this has the highest probability of occurrence of all attempts at an ETF to date.”
Featured image from iStock, charts from TradingView