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BlackRock, the world’s largest asset manager, is reportedly moving to file an application to register a Bitcoin exchange-traded fund (ETF) with the Securities and Exchange Commission. This news was first reported by CoinDesk on Thursday.
According to the report, BlackRock, which had $9.5 trillion in assets under management in the first quarter of 2023, is reportedly working together with Coinbase (COIN), the largest US cryptocurrency exchange. The ETF would use Coinbase Custody for the ETF, and rely on the exchange's spot market data for pricing.
BlackRock previously sealed a partnership with Coinbase last August to enable clients using BlackRock's investment management platform Aladdin to possess and trade in digital assets, starting with Bitcoin. The deal gives BlackRock clients access to Coinbase’s trading, custody, prime brokerage and reporting services.
A spokesperson for Coinbase said that they have no comment at this time. BlackRock did not immediately respond to Decrypt’s request for a comment.
Registering a Bitcoin ETF with the SEC has been a difficult task, especially for funds dealing with spot market trading. To date, not a single application for such a spot ETF has been approved by the SEC over concerns about potential fraud or manipulation in the spot market. In contrast, the SEC has approved four Bitcoin ETFs for futures trading.
An ETF is a type of investment product tied to commodities, currencies, stocks or bonds. It allows investors to have skin in the game without actually owning a particular asset. A Bitcoin ETF allows investors to invest in the world's oldest and largest cryptocurrency without having to hold it themselves—rather, they just buy shares that track the asset’s price.
The SEC’s reluctance to green light an ETF for the Bitcoin spot market has been a sore point for would-be applicants.
In 2016, asset manager Grayscale submitted an application for a Bitcoin spot market ETF with the SEC, but was rejected by the SEC in June 2022, prompting Grayscale to respond with a lawsuit.
In March, a federal judge cast doubt on the SEC's claims that data provided by Grayscale for its proposed ETF was insufficient for determining whether fraud or manipulation in the spot markets impacts futures markets in the same way.