BlackRock, the world’s largest asset manager, applied With the US Securities and Exchange Commission (SEC) for listing in the iShares Bitcoin (BTC) Trust and trading on NASDAQ.
However, the SEC has previously expressed concerns about the potential for market manipulation regarding bitcoin prices and cited this as a reason for denying previous applications for BTC ETFs.
To address this concern, BlackRock has partnered with Nasdaq to enter into a watch-sharing agreement with the operator of a Bitcoin spot trading platform.
Possible approval of Blackrock’s Bitcoin spot ETF
The iShares Bitcoin Trust, offered by BlackRock, differs from other proposed BTC ETFs in key respects.
Pursuant to Blackrock’s request, the trust will be issued by statutory trust in Delaware and will operate under a trust agreement between BlackRock, the trustee, and a trustee in Delaware. This differs from other proposed Bitcoin ETFs, which are usually structured as investment funds.
Furthermore, the iShares BTC Trust will primarily hold bitcoin, with the Coinbase Custody Trust as the custodian for its BTC holdings.
This is the same custodian used by the Grayscale Bitcoin Trust, which is the largest investment fund for BTC. However, some other proposed Bitcoin ETFs plan to use different custodians or even hold bitcoins directly.
Finally, the investment objective of the iShares Bitcoin Trust is to mirror the performance of the BTC price, prior to paying the fund’s expenses and liabilities. The shares aim to provide investors with an alternative way to achieve investment exposure to BTC through the public stock market.
This is similar to other proposed BTC ETFs but different from the Grayscale Bitcoin Trust, which is structured as a private placement and is only available to accredited investors.
BlackRock’s ETF approval rate is nearly perfect
It is difficult to predict the chances of SEC approval of BlackRock’s iShares BTC Trust, as the SEC has historically been cautious about approving Bitcoin ETFs due to concerns about market manipulation and other regulatory issues.
However, BlackRock’s decision to partner with Nasdaq to address the SEC’s market manipulation concerns could improve the chances of approval. The watch-sharing agreement with the operator of the BTC spot trading platform is designed to provide the SEC with greater insight into the BTC market and reduce the potential for market manipulation.
According to Eric Balchonas, ETF Senior Analyst at Bloomberg, BlackRock’s record of acquiring ETFs which has been approved by the SEC as “impressive,” with a success rate of 575-1. This means that of the 576 ETFs that BlackRock has submitted to the Securities and Exchange Commission, only one has been rejected.
This impressive track record is a testament to BlackRock’s ability to navigate a complex regulatory landscape and create investment products that meet stringent SEC standards.
Furthermore, BlackRock is a well-established and respected player in the financial industry with a proven track record of launching successful investment products. This may give the SEC more confidence in the company’s ability to manage the risks associated with the BTC ETF.
BlackRock’s move marks a major step toward achieving regulatory approval for the Bitcoin ETF in the United States. iShares BTC Trust will be the first Bitcoin ETF listed on a US exchange if approved.
However, the decision to approve or deny BlackRock’s application for the iShares BTC Trust will be up to the SEC. However, given the growing interest in cryptocurrencies and the growing demand for regulated investment products that provide exposure to BTC, the SEC may be open to approving Blackrock’s application.
Featured image from Unsplash, chart from TradingView.com