iShares Files for Spot Bitcoin ETF

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BlackRocks arm iShares filed an ETF on Thursday that will hold physical bitcoin. Many issuers threw their hats in the same circle and none managed to launch a product. However, given its status in the ETF industry globally, if successful, BlackRock has the potential to dominate the space, even if it falls short of first-to-market status.

The SEC has always opposed spot trading of bitcoin ETFs. They fear fraud and manipulation. However, if a product were to go to market, it would be a huge success given BlackRocks’ industry leadership and advisor relationships, said Todd Rosenbluth, head of research at VettaFi.

A long wait

Admittedly, the wait for a physical bitcoin ETF has been long and tumultuous. Over a decade ago, Cameron and Tyler Winklevoss filed an application with the SEC to launch the Winklevoss Bitcoin Trust. There has been a long series of rejections since.

Firms like Fidelity, WisdomTree and VanEck have all seen their bids to launch such a product go nowhere. And Grayscale is currently suing the SEC for permission to convert its $15.9 billion Grayscale Bitcoin Trust into an ETF. The firm argues that deep discount funds would disappear if they could, to the benefit of its investors.

In October 2021, ProShares scored a major victory when the SEC approved its ProShares Bitcoin Strategy ETF (BITO), the first ETF to invest in bitcoin futures. For many investors, it was the next best thing to a physical bitcoin ETF. The fund quickly amassed $1 billion in assets under management within days. That said, nearly two years later, that amount has dropped to $823.2 million. The cryptocurrency is currently trading well above the highs it hit in 2021.

The SEC has long maintained that cryptocurrencies could be subject to manipulation and that there are not enough protections for investors. SEC Chairman Gary Gensler has insisted that these issues must be resolved for the SEC to approve a physical bitcoin ETF. But BlackRock is the world’s largest asset manager and could mount a convincing endorsement campaign.

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