In a potential game changer for crypto markets, asset management giant BlackRock is moving to launch an exchange-traded fund for Bitcoin. In an application filed on Thursday, the company sought permission to sell the currency through a vehicle called the iShares Bitcoin Trust.
The move is significant because of BlackRock’s enormous reach, and because it would allow retail investors to buy Bitcoin as shares of an ETF from an ordinary brokerage account. Likewise, it would make it easier for institutional investors, including pension funds, to hold the asset.
The ETF application states that Coinbase would be tasked with holding the trust’s underlying Bitcoin as a custodian. It also states that Nasdaq would oversee the pricing data that informed the spot market price—a potentially critical factor since the Securities and Exchange Commission has so far refused to permit a Bitcoin ETF, citing fears of market manipulation.
The price of Bitcoin, which has been slumping in the face of regulatory pressures and hawkish monetary policy from the Federal Reserve, jumped around 3% on news of the BlackRock application.
While it has become increasingly easy to buy Bitcoin in recent years—with everyone from Coinbase to PayPal to Robinhood offering it—there is still no easy way to obtain it in the form of traditional shares. This has proved an impediment for large institutions, which are subject to bylaws that limit what sort of asset they may hold on behalf of their customers.
Currently, the most popular option to acquire Bitcoin in the form of shares is the Grayscale Bitcoin Trust, which does not trade on a major stock exchange. The Grayscale trust also charges a management fee of around 2% a year, which is viewed as too high by many investors.
BlackRock is hardly the first to seek to offer Bitcoin as an ETF, where fees are typically well under 0.5%. Grayscale and a number of funds have also sought permission, but have been denied by the SEC.
According to a source familiar with the BlackRock application, the company believes it will be able to succeed where other applicants have failed, in part because of its pedigree, but also because Nasdaq will be overseeing the pricing data—a situation the person believes will ease concerns about the ETF manager manipulating the asset price on which the ETF is based.
The SEC last year finally granted permission for a crypto ETF, but only for futures markets—a product that is significantly more complicated than a spot market ETF, and one that is more expensive for investors. Grayscale has sued the agency over this decision, saying it is arbitrary, and based on a recent federal court hearing, analysts have said the company has a good chance to prevail.
This story was updated with additional details.
