BlackRock deposits bitcoin cash ETF, Coinbase as crypto custodian

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Bitcoin is up 50% so far in 2023, beating major stock and commodity indices.

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Asset management giant BlackRock took the first steps on Thursday to launch a cash bitcoin exchange-traded fund, which has long been a point of contention between crypto advocates and federal regulators.

The company has filed an application with the United States Securities and Exchange Commission to launch the iShares Bitcoin Trust. If approved, the ETF would allow investors easy access to crypto in a product from one of Wall Street’s biggest firms.

“The shares are intended to be a simple means of making an investment similar to investing in bitcoin rather than acquiring, holding and trading bitcoin directly on a peer-to-peer or other basis or through an asset exchange. digital,” the filing said.

The SEC has so far resisted the launch of a spot bitcoin ETF in the United States. The regulator is currently in a legal battle with Grayscale over whether the company will be allowed to convert its Grayscale Bitcoin Trust into an ETF. A decision in this case is expected later this year.

Several other companies have filed and then withdrawn applications to launch spot Bitcoin funds. If the SEC gives in, there could be a flood of these products in the market.

ETFs typically take months to launch after an initial deposit, if they start trading. The proposed BlackRock fund is likely to face strong resistance from the SEC, and the filing could be withdrawn before an ETF is launched, said Aisha Hunt, director of asset management law firm Kelley Hunt. & Charles.

BlackRock’s move comes at a time when crypto prices remain well below their all-time highs and the industry faces increasing scrutiny in Washington, D.C.

The SEC recently sued Coinbase and Binance for allegedly running unregistered securities exchanges. The SEC also accused Binance of mixing client funds with its own.

Coinbase is listed as the bitcoin custodian for the proposed BlackRock ETF. BlackRock has an existing strategic partnership with Coinbase. The companies announced last year that Aladdin, BlackRock’s institutional investment platform, would be connected to Coinbase Prime for crypto trading and custody.

The SEC did not immediately respond to CNBC’s request for comment on the new filing.

BlackRock’s entry into the bitcoin ETF space could give a boost to an industry that has had a rocky start over the past two years.

Bitcoin futures ETFs were first launched in 2021, but the ProShares Bitcoin Strategy ETF (BITO) is the only one to have reached a substantial size, with around $800 million in assets. The fund has lost more than 40% on a total return basis since inception, according to FactSet. The price of bitcoin hit an all-time high shortly after the launch of BITO and has fallen over 60% since its peak.

See the table…

The largest bitcoin futures ETF has generated a negative return since its launch in 2021.

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