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BlackRock, the world’s largest asset manager, has filed for a bitcoin exchange-traded fund (ETF). This ambitious venture aims to allow investors to gain exposure to the increasingly popular digital currency, even as regulatory watchdogs continue to scrutinize the crypto asset class.
A New Trust in Town: iShares Bitcoin Trust
BlackRock’s proposed iShares Bitcoin Trust is slated to use Coinbase Custody as its custodian, as detailed in the filing with the U.S. Securities and Exchange Commission (SEC). It is worth noting that the SEC has yet to give a green light to any spot bitcoin ETFs applications.
Only last year, BlackRock blazed a trail by launching a spot Bitcoin private trust for institutional clients in the United States. This new ETF move signals an increased dedication to crypto assets, despite the global industry facing ongoing legal challenges, including allegations of securities law violations.
Shaky Regulatory Landscape
This month saw the SEC suing major exchanges, Coinbase and Binance, in lawsuits that sent shockwaves through the digital assets industry. Nonetheless, Joshua Chu, group chief risk officer at blockchain technology group XBE, views BlackRock’s ETF filing as a positive stride in the pursuit of regulatory approval.
His comments highlight the enduring public interest in crypto, saying, “It also shows the resilience of the public’s interest in crypto.”
Bitcoin ETF: What’s the Big Deal?
A spot bitcoin ETF tracks bitcoin’s underlying market price, providing investors with exposure to bitcoin without the need for direct purchase. This concept has faced hurdles in the past, with the SEC rejecting Grayscale Investment LLC’s application to convert its Grayscale Bitcoin Trust into an ETF last year.
The SEC’s stance has been consistent, having also rejected spot bitcoin ETF proposals from firms like Fidelity, Cboe Global Markets, and NYDIG. Grayscale has since sued the SEC, alleging arbitrary treatment in the rejection of spot bitcoin ETF applications while approving bitcoin futures ETFs.
The announcement from BlackRock sparked a 2% surge in bitcoin prices, with the largest cryptocurrency valued at $25,506 on the following Friday, marking a 54% year-to-date increase.
Bitcoin and Environmental Stewardship
Interestingly, BlackRock, under the helm of CEO Larry Fink, has been a leading advocate of the “ESG movement” in investing, with the “E” standing for Environmental. The company’s decision to venture into Bitcoin mining and trading suggests a belief that these activities are in line with its pro-environment values. This development may raise some eyebrows, given the ongoing debate about the environmental impact of Bitcoin mining.
Action Is Needed
Patrick McHenry, Chairman of the Financial Committee, tweeted in response to BlackRock’s filing, urging Gary Gensler, the head of the SEC, to ensure fair treatment in the agency’s decisions. His tweet underscored the importance of the regulator not picking “winners and losers based on inconsistent factors.” McHenry’s tweet underlines the growing attention from regulators and lawmakers alike on the evolving landscape of cryptocurrency.