- BlackRock and Coinbase collaborate on a Bitcoin spot ETF application.
- Prior attempts for a Bitcoin spot ETF faced SEC rejection.
- BlackRock’s application may reshape the Bitcoin ETF landscape.
In an audacious stride, BlackRock, the titan of global asset management, is on course to initiate a Bitcoin spot ETF. On Thursday, the firm formally lodged an application with the US SEC. This move follows rumors sparked by a CoinDesk report suggesting an imminent filing.
Teaming up with Coinbase, the leading US crypto exchange, BlackRock is venturing to shape a novel financial product. With a staggering $9.5 trillion in assets as of Q1 2023, BlackRock’s bold moves in the financial sphere are not new. Moreover, as per reports, this ETF will utilize Coinbase Custody and its spot market data for pricing, while BNY Mellon safeguards the cash assets.
Previous Collaborations and Potential Obstacles Ahead
According to sources, BlackRock shook hands with Coinbase last August, allowing its Aladdin investment management platform users to own and trade in digital currencies. Consequently, this partnership provided BlackRock clients comprehensive access to Coinbase’s services, including trading, custody, prime brokerage, and reporting.
However, the road to a spot in Bitcoin ETF has been fraught with difficulties. Despite the SEC giving the green light to four Bitcoin futures ETFs, no spot market ETF has yet seen the light of day. The concerns stem from potential fraud and manipulation of the unregulated and fragmented spot market.
Besides the pushback from the SEC, previous attempts at a Bitcoin spot ETF have also met resistance. In June 2022, Grayscale, a leading asset manager, saw its application for a Bitcoin spot market ETF rejected by the SEC. The subsequent lawsuit saw Grayscale arguing that the risks associated with both spot and futures ETFs were equivalent. However, the SEC distinguished the regulated futures market from the unregulated spot market.
On the contrary, as the world waits with bated breath, BlackRock’s application may prove to be a turning point in the landscape of Bitcoin ETFs.
