By Frances Yue
BlackRock, the world’s largest asset manager, is reportedly close to filing an application for a bitcoin exchange-traded fund (ETF), according to a CoinDesk report Thursday, citing a person familiar with the matter.
The asset manager (BLK) will reportedly tap Coinbase Global Inc. (COIN) to provide custody for the ETF, drawing upon the crypto exchange’s spot market data for pricing, according to CoinDesk.
It is not clear if the ETF will be spot or futures-based, the report said. A representative at BlackRock didn’t return a request seeking comment for this article.
The U.S. Securities and Exchange Commission approved several bitcoin futures-based ETFs in the past, but has yet to green light anything that is backed by bitcoin, itself.
It would be especially impactful if BlackRock is applying for a spot bitcoin ETF, according to Matt Zhang, founder and managing partner at Hivemind.
If an asset manager as big as BlackRock is making such a move at a time when crypto regulation is being tightened, “they probably have done sufficient due diligence to know there is a decent chance for the ETF to get approved by the regulators,” Zhang said.
The SEC recently sued both crypto exchanges Binance and Coinbase, increasing the regulatory pressure on the digital asset industry in the United States.
As the crypto industry is under stress, BlackRock’s reported filing for a bitcoin ETF. “says a lot about institutional confidence in at least bitcoin,” according to David Tawil, president and co-founder at ProChain Capital.
It also may bode well for the whole crypto industry, Tawil said. “You’d only apply for a crypto ETF if you believe in the longevity of the asset class,” Tawil said in a phone interview.
While the SEC named several cryptocurrencies, such as BNB, Solana , Cardano and Polygon as securities in lawsuits against Binance and Coinbase, the agency’s chairman Gary Gensler has repeatedly said that bitcoin was the only cryptocurrency he was prepared to publicly label a commodity, rather than a security.
The SEC’s recent actions are “actually not bad for bitcoin,” said Peter Eberle, chief investment officer at Castle Funds. “Perhaps BlackRock saw that and has decided that they want to make a move in that direction,” noted Eberle in a call.
Bitcoin is trading at around $25,376 on Thursday, down 1.9% over the past 24 hours, according to CoinDesk data. The largest cryptocurrency gained 50% year-to-date, but is still down over 60% from its record high in 2021.
-Frances Yue
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06-15-23 1642ET
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