BlackRock delves deeper into cryptocurrency with spot Bitcoin ETF filing

Asset manager’s product will trade on the Nasdaq if approved by the SEC

BlackRock oversaw more than $9 trillion in assets at the end of the first quarter. Reuters

The world's biggest asset manager BlackRock has filed for a spot Bitcoin exchange-traded fund that would allow investors to have exposure to the cryptocurrency.

The asset management company’s iShares Bitcoin Trust will use Coinbase Custody as its custodian, according to a filing with the US Securities and Exchange Commission on Thursday.

If the SEC approves the application, the fund would trade on the Nasdaq stock market, making it the first publicly traded spot Bitcoin ETF in the US.

An ETF is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can.

BlackRock oversaw more than $9 trillion in assets at the end of the first quarter.

“The assets of the trust consist primarily of Bitcoin held by a custodian on behalf of the trust. The trust seeks to reflect, generally, the performance of the price of Bitcoin,” BlackRock said in the SEC filing.

“The trust is not an investment company registered under the United States Investment Company Act of 1940, and the sponsor is not registered with the SEC as an investment adviser and is not subject to regulation by the SEC as such in connection with its activities with respect to the trust.”

The move comes at a time when the global cryptocurrency industry has been caught in the crosshairs of the US securities regulator on alleged breaches of securities laws and following the collapse of FTX last year.

Earlier this month, the SEC sued major exchanges Coinbase and Binance in high-profile lawsuits that accused them of allegedly running unregistered securities exchanges.

The regulator also accused Binance of co-mingling customer funds with its own.

Coinbase has said that a lack of clear rules for the digital assets industry is hurting US economic competitiveness.

The SEC has previously rejected several spot Bitcoin ETF applications from other asset managers, citing market concerns and a lack of investor protections, among other things.

This is at least the 33rd attempt by issuers for a spot Bitcoin product, according to a tally from Bloomberg Intelligence.

BlackRock’s attempt at a spot Bitcoin ETF comes amid digital asset manager Grayscale Investments' legal battle with the SEC.

Grayscale sued the regulator after it denied a bid to convert the Grayscale Bitcoin Trust into a physically-backed ETF, citing fraud and manipulation concerns related to the underlying market.

BlackRock already runs a private spot Bitcoin trust that it launched last year, the Financial Times reported.

“The trust intends to issue shares on a continuous basis. The trust issues and redeems shares only in blocks of 40,000 or integral multiples,” BlackRock said in the SEC filing.

“A block of 40,000 shares is called a basket. These transactions take place in exchange for Bitcoin.

“Shares will be offered to the public from time to time at varying prices that will reflect the price of Bitcoin and the trading price of the shares on the Nasdaq stock market.”

Despite a tumultuous 12 months for the global cryptocurrency sector, the market is beginning to emerge from its “crypto winter”.

In April, Bitcoin climbed above the key $30,000 mark for the first time since June 2022, but is still down more than 50 per cent from its record high of more than $68,000 in November 2021.

Bitcoin was trading at $25,558.17 at 11.28am on Friday, according to Binance.

BlackRock founder Larry Fink wrote in his annual letter to investors in March that “very interesting developments are happening in the digital asset space … At BlackRock, we continue to explore the digital assets ecosystem”.