Investment giant BlackRock (BLK) filed an application for a Bitcoin exchange-traded fund (ETF) on Thursday using the crypto exchange Coinbase (COIN) for custody and market pricing, in what would be the first product of its kind in the U.S. if approved.
Key Takeaways
- BlackRock filed an SEC application on Thursday for a Bitcoin ETF.
- The application lists Coinbase as the custodian for assets and pricing data.
- If approved, it would be the first product of its kind in the U.S.
- While the SEC has previously approved Bitcoin futures ETFs, it denied multiple spot ETF applications for the coin.
The new iShares Bitcoin Trust will be listed on the Nasdaq exchange and pricing will be calculated daily based on the CF CME Bitcoin Reference Rate, which “aggregates the notional value of Bitcoin trading across major Bitcoin spot exchanges,” according to the prospectus. All shares in the ETF will be fully backed by BTC and no new shares can be issued without delivery of the corresponding value of tokens.
However, the BlackRock offering still requires approval from the SEC, which has so far pushed back against multiple spot-based ETF applications.
The SEC is currently involved in a court battle with digital asset management firm Grayscale over its plans to convert its Grayscale Bitcoin Trust (GBTC) from a futures-backed index to spot, and may not approve BlackRock’s application until a court ruling is due later this year.
In its first oral arguments against Grayscale, the SEC cited the “fragmented and unregulated” spot market as the reason for its stance, arguing that the regulated futures market provided more security for investors and pointed to "surveillance sharing" agreements that protect against market manipulation.
Regulatory approval for the iShares Bitcoin Trust would be a boost for Coinbase after suffering deposit outflows after a separate legal action from the SEC. The regulator accused the company of operating an "unlawful exchange."
BlackRock shares finished 2.71% higher on Thursday, while Coinbase shares edged up 0.65%.
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