BlackRock, the world’s largest asset manager, is not giving up on its quest to launch a bitcoin exchange-traded fund (ETF) in the US. According to recent filings, the firm’s bitcoin ETF team has met with the Securities and Exchange Commission (SEC) five times since June 2023, discussing various aspects of its proposed product.
The SEC has been reluctant to approve any bitcoin ETFs in the US, citing concerns over market manipulation, investor protection, and custody issues. However, BlackRock is hoping to convince the regulator that its bitcoin ETF would address these challenges and provide a safe and convenient way for investors to access the cryptocurrency market.
BlackRock’s bitcoin ETF would track the performance of the CME CF Bitcoin Reference Rate, a benchmark that reflects the average price of bitcoin across multiple spot exchanges. The fund would also use a network of third-party custodians to hold the underlying bitcoins, ensuring that they are secure and insured.
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BlackRock’s bitcoin ETF team has met with various SEC officials, including the director of the Division of Investment Management, the chief economist, and the senior advisor to the chair. The topics of discussion included the structure and operation of the fund, the valuation and liquidity of bitcoin, the risk management and compliance procedures, and the potential impact on the broader market.
BlackRock is not the only firm that is pursuing a bitcoin ETF in the US. Several other companies, such as VanEck, WisdomTree, and Valkyrie, have also filed applications with the SEC, hoping to be the first to launch a bitcoin ETF in the country. However, none of them have received a green light from the regulator yet.
The SEC has delayed its decisions on several bitcoin ETF proposals until early 2024, indicating that it is still reviewing the merits and risks of these products. The agency has also asked for public comments on various aspects of bitcoin ETFs, such as their potential benefits and drawbacks for investors, their impact on market integrity and stability, and their compatibility with existing regulations.
The demand for a bitcoin ETF in the US is high, as investors are looking for a more convenient and regulated way to gain exposure to the cryptocurrency market. A bitcoin ETF would allow investors to buy and sell shares of the fund on a stock exchange, without having to deal with the complexities and risks of buying and storing bitcoins directly.
A bitcoin ETF would also open up the cryptocurrency market to a wider range of investors, such as institutional investors, retail investors, and financial advisors. This could increase the adoption and acceptance of bitcoin as a legitimate asset class, and potentially boost its price and liquidity.
However, a bitcoin ETF also comes with some challenges and uncertainties. For instance, a bitcoin ETF would be subject to the volatility and unpredictability of the cryptocurrency market, which could expose investors to significant losses. A bitcoin ETF would also depend on the reliability and security of its custodians and service providers, which could pose operational and counterparty risks.
Moreover, a bitcoin ETF would face regulatory scrutiny and uncertainty from various authorities, such as the SEC, the IRS, and state regulators. A bitcoin ETF would have to comply with various rules and regulations regarding registration, disclosure, taxation, reporting, and auditing. A bitcoin ETF could also be subject to legal actions or enforcement actions from regulators or other parties.
Therefore, investors who are interested in a bitcoin ETF should be aware of both the opportunities and risks involved in this type of product. They should also do their own research and due diligence before investing in any bitcoin ETF.
BlackRock’s bitcoin ETF team is working hard to persuade the SEC that its product is worthy of approval. However, it is unclear when or if the SEC will grant its authorization. Until then, investors will have to wait patiently or look for other ways to access the cryptocurrency market.