BlackRock Seeks Green Light for Pioneering Bitcoin Spot ETF in the US

BlackRock, the globally dominant investment firm, is seeking regulatory approval for a Bitcoin spot exchange-traded fund (ETF).

The details of the proposal, submitted to the US Securities and Exchange Commission, disclose that Coinbase Custody Trust Company would secure the fund's Bitcoin holdings while the Bank of New York Mellon would take on custody of its fiat.

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If successful, the ETF would be listed as Commodity-Based Trust Shares under BlackRock’s iShares Bitcoin Trust. As highlighted in the June 15 application:

The Shares aim to dissolve the impediments constituted by the complexities and operational challenges associated with a direct Bitcoin investment.

The pricing of Bitcoin will undergo updates based on the CF Benchmarks Index at a minimum frequency of 15 seconds throughout the standard trading hours.

The application accentuates that the SEC has historically granted approvals to spot exchange-traded products in the commodities and currency markets domains. This was achieved despite their general lack of regulation, as “the Commission relied on the underlying futures market” to serve as the foundation for sanctioning trust shares.

As such, the regulated market of significant size test does not require that the spot bitcoin market be regulated in order for the Commission to approve this proposal.

Despite a handful of applications, the SEC has not approved any spot Bitcoin ETF. Grayscale challenged the SEC in an appeals court over the stability of Bitcoin futures following the SEC's rejection of its spot Bitcoin ETF application.

Other investment firms, such as Cathie Wood’s ARK Invest and 21Shares, are actively pursuing the approval of spot Bitcoin ETFs, having submitted their third applications in April.

The first-ever spot-traded Bitcoin ETF was launched in 2021 by Canada’s Purpose Bitcoin ETF. In a potentially significant move, BlackRock is now trying to bring a similar financial product to the American market.