BlackRock’s iShares unit recently filed paperwork with the U.S. Securities and Exchange Commission (SEC) for the formation of a spot bitcoin (BTC) exchange-traded fund (ETF). The proposed fund is technically a trust, but it will act like an ETF. Eric Balchunas of Bloomberg tweeted that this is exactly how the SPDR Gold Shares ($GLD) ETF works.
The market has some consternation with the word trust in the context of publicly-traded bitcoin instruments given Grayscale’s bitcoin product, the Grayscale Bitcoin Trust (GBTC). GBTC shares trade at a steep discount to net asset value, with the market value of a share of GBTC being $13.40 even though the amount of bitcoin held per share is $23.00 (as of June 15, 2023).
If the iShares Bitcoin Trust is approved and functions with daily creations and redemptions, then it would basically look and act like an ETF. The sheer amount of attention a BlackRock-sponsored bitcoin ETF would garner cannot be overstated. BlackRock is the largest asset manager in the world, and it could bring an air of legitimacy and a heavy inflow of money.
Exchanges should be a bit fearful, as new investors may look to pay as little as possible for bitcoin exposure. Additionally, with bitcoin’s fixed supply, the introduction of a spot ETF from BlackRock could supercharge the expansion of paper bitcoin.
The SEC has rejected every spot market bitcoin ETF put before it, but BlackRock’s filing comes with heightened market surveillance features. Whether the SEC will approve BlackRock’s offering is still up in the air, but an approval of the iShares Bitcoin Trust will be a big deal.