BlackRock’s application for a spot Bitcoin ETF has raised some questions about the difference between an ETF and a trust. Noelle Acheson, editor of Crypto is Macro Now, said, “It’s a reminder of just how complex ETF terminology is. Technically, BlackRock’s proposal is for a trust, but it’s a trust that allows redemptions, so it functions just like an ETF.” Joe Consorti, market analyst at The Bitcoin Layer, explained that an ETF for spot bitcoin “would be able to buy bitcoin at the end of the trading day to bring the fund’s assets in line with its trading price. A trust does not have the ability to do this.” This means that a trust will occasionally trade higher or lower than the value of its underlying assets, which is an issue currently facing Grayscale Bitcoin Trust (GBTC). Grayscale has been attempting to convert its trust to a spot bitcoin ETF for some time, but has been rejected by the SEC due to worries about market manipulation. BlackRock is hoping to get past this issue with a “surveillance-sharing agreement” between exchanges.
What is the Difference Between a Bitcoin ETF and a Bitcoin Trust?
