BlackRock Investment Company decided to create a spot exchange product based on cryptocurrency. And this despite numerous refusals by the regulator to register such funds
iShares, a division of BlackRock Investment Company, filed documents with the U.S. Securities and Exchange Commission (SEC) to register the iShares Bitcoin Trust. The trust’s units, if approved, will trade on NASDAQ.
BlackRock is one of the largest investment firms in the world and the largest in terms of assets. And it manages about 1,000 funds with assets totaling more than $9 trillion (as of the end of March). The company also manages about $24.7 billion in reserve funds for Circle, the issuer of the second most capitalized USD Coin Stablecoin (USDC).
Bitcoin Trust and Spot Bitcoin ETFs are products that track the real price of Bitcoin. Their point is to give investors access to BTC through a regulated and familiar product. And without actually owning Bitcoin.
Futures-based exchange-traded funds differ from spot funds in that they offer investors access to futures contracts rather than to an asset.
When you buy units of a spot fund, unlike futures products, there is an actual purchase of Bitcoin in the market. If big players show interest in such a product, it may have an impact on the price of the asset.
The assets of iShares Bitcoin Trust consist mainly of Bitcoins. And the custodian of which will be Coinbase, the company said in a statement. The Bank of New York Mellon will hold the trust’s cash.
The trust could be the first Bitcoin-based spot exchange product in the U.S. According to Bloomberg, this is at least the 33rd attempt by issuers to create a spot product based on VTCs. Previously, all applications were rejected by regulators. And which cited, among other things, the problems of the crypto market and the lack of investor protection.
In January, the SEC rejected cryptocurrency exchange traded fund issuer 21Shares and Katie Wood’s investment firm ARK Investment Management for the second time to create a spot bitcoin ETF. In March, regulators rejected VanEck’s application for a spot bitcoin-ETF for the third time.
At the same time, exchange-traded funds (ETFs) based on Bitcoin futures were getting SEC approval. The first was the Bitcoin Strategy ETF from ProShares. And its shares became available to investors on the New York Stock Exchange in October 2021.
Our experts note that back in 2022, SEC head Gary Gensler explained. That applications for spot funds do not meet the standards of the Securities Act, so they are rejected by the commission.
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