BlackRock, the world’s largest asset manager, applied with the US Securities and Exchange Commission (SEC) for its iShares Bitcoin (BTC) Trust to be listed and traded on the Nasdaq stock exchange.
However, the SEC has previously expressed concerns about the potential for market manipulation related to Bitcoin prices and has cited this as a reason for rejecting previous applications for BTC ETFs.
To address this concern, BlackRock has partnered with Nasdaq to enter into a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin.
Potential Approval For Blackrock’s Spot Bitcoin ETF
The iShares Bitcoin Trust, filed by BlackRock, differs from other proposed BTC ETFs in key ways.
According to Blackrock’s application, the Trust will be issued by a Delaware statutory trust and will operate under a trust agreement between BlackRock, the Trustee, and a Delaware Trustee. This is different from other proposed Bitcoin ETFs, which have typically been structured as investment trusts.
Furthermore, the iShares BTC Trust will primarily hold Bitcoin, with Coinbase Custody Trust Company as the custodian for its BTC holdings.
This is the same custodian used by Grayscale Bitcoin Trust, the largest BTC investment trust. However, some other proposed Bitcoin ETFs have planned to use different custodians or even to hold Bitcoin directly.
Finally, the investment objective of the iShares Bitcoin Trust is to reflect the performance of BTC’s price, before payment of the Trust’s expenses and liabilities. The Shares are intended to provide investors with an alternative method of achieving investment exposure to BTC through the public securities market.
This is similar to other proposed BTC ETFs but differs 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 Almost PerfectIt is difficult to predict the chances of the SEC approving BlackRock’s iShares BTC Trust, as the SEC has historically been cautious about approving Bitcoin ETFs due to concerns around market manipulation and other regulatory issues.
However, BlackRock’s decision to partner with Nasdaq to address the SEC’s market manipulation concerns may improve the approval chances. The surveillance-sharing agreement with an operator of a spot trading platform for BTC is designed to provide the SEC with greater visibility into the BTC market and reduce the potential for market manipulation.
According to Bloomberg’s senior ETF analyst Eric Balchunas, BlackRock’s track record of getting ETFs approved by the SEC is “impressive,” with a success rate of 575-1. This means that out of the 576 ETFs that BlackRock has filed with the SEC, only one has been rejected.
This impressive track record is a testament to BlackRock’s ability to navigate the complex regulatory landscape and create investment products that meet the SEC’s rigorous standards.
Furthermore, BlackRock is a well-established and respected player in the financial industry with a strong track record of launching successful investment products. This may give the SEC greater confidence in the company’s ability to manage the risks associated with a BTC ETF.
BlackRock’s move marks a major step towards achieving regulatory approval for a Bitcoin ETF in the US. The iShares BTC Trust would be the first Bitcoin ETF listed on a US exchange if approved.
Nevertheless, the decision to approve or reject BlackRock’s application for the iShares BTC Trust will be up to the SEC. However, given the increasing interest in cryptocurrency 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
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