On Thursday afternoon, the world’s biggest asset management, BlackRock, submitted paperwork to the United States Securities and Exchange Commission (SEC) to establish a spot Bitcoin exchange-traded fund (ETF).
Coinbase, the biggest cryptocurrency exchange in the United States, is collaborating with BlackRock, which managed $9.5 trillion in assets in the first quarter of 2023. Coinbase Custody would handle the ETF’s holdings and utilize the exchange’s spot market data to determine prices, while BNY Mellon would hold the cash component of the ETF. This comes at a time when the U.S. securities commission has been scrutinizing the cryptocurrency business for possible breaches of securities laws on a worldwide scale.
In order to provide customers of BlackRock’s Aladdin investment management platform with access to digital assets, beginning with Bitcoin, BlackRock and Coinbase signed a collaboration agreement in August of last year. The agreement opens up Coinbase’s trading, custody, prime brokerage, and reporting services to BlackRock’s clientele.
While the SEC has approved many futures-based bitcoin ETFs, it has denied requests by Grayscale, VanEck, and WisdomTree, among others, to launch a spot bitcoin ETF. BlackRock, on the other hand, could be harder for the SEC to reject. With over $10 trillion in AUM, BlackRock is the biggest asset manager in the world, and its CEO, Larry Fink, has political clout that may rival that of SEC Chairman Gary Gensler.
BlackRock’s application for a spot Bitcoin ETF marks a watershed moment as a major participant in the more conventional financial sector recognizes Bitcoin’s potential. If the Bitcoin ETF were to get regulatory approval, it would pave the way for a flood of new investors to enter the Bitcoin market via a standardized and easily accessible investment instrument.
