BlackRock, the world’s largest asset manager, moved to register a spot Bitcoin exchange-traded fund (ETF) with the United States Securities and Exchange Commission on Thursday afternoon. This was widely expected following a CoinDesk report of an imminent filing.
The ETF will use Coinbase Custody, and rely on the exchange’s spot market data for pricing, while BNY Mellon will be the cash custodian. Last August, BlackRock entered into a partnership with Coinbase to enable clients using their investment management platform Aladdin to invest in and trade digital assets, starting with Bitcoin. This gives BlackRock clients access to Coinbase’s trading, custody, prime brokerage and reporting services.
Registering a Bitcoin ETF with the SEC has been challenging, particularly for spot market trading funds. So far, no application for such a spot ETF has been approved by the SEC, due to 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 related to commodities, currencies, stocks or bonds. It allows investors to gain exposure to an asset without actually owning it. A Bitcoin ETF gives investors the opportunity to invest in the world’s largest and oldest cryptocurrency without having to own it themselves. Instead, they simply buy shares that track the asset’s price.
Due to the SEC’s reluctance to sign off on a Bitcoin spot market ETF, several attempts have been made. In 2016, asset manager Grayscale submitted an application for a spot market ETF to the SEC, which was rejected in June 2022. Grayscale subsequently responded with a lawsuit. In March, a federal judge questioned the SEC’s claims that the data provided by Grayscale for its proposed ETF was insufficient for determining whether fraud or manipulation affects futures markets.
This article was updated after publication to reflect the application has now been filed.
