Can the world’s largest asset manager succeed where Grayscale has so far failed?
That is the question BlackRock Inc (NYSE:BLK) is determined to have answered after filing its iShares Bitcoin Trust ETF with the US Securities and Exchange Commission (SEC) this week.
Approval of the ETF would give exposure to bitcoin’s price action without holding the underlying asset, a move that would open up bitcoin to millions of new investors.
“The shares have been designed to remove the obstacles represented by the complexities and operational burdens involved in a direct investment in bitcoin,” reads BlackRock’s prospectus.
Should the SEC approve BlackRock’s application, iShares Bitcoin Trust ETF would become the first bitcoin spot ETF to ever be approved in the US, following years of rejecting similar applications made by Grayscale.
Grayscale has desperately tried to convert its Grayscale Bitcoin Trust into a publicly traded ETF in order to revitalise its flagging share price, which hit a devastating 50% discount to bitcoin assets under management earlier this year.
Under chair Gary Gensler, the SEC has shown zero interest in changing its stance, with Gensler claiming he wants to protect investors and the public interest, citing Grayscale’s apparent failure to demonstrate how it is “designed to prevent fraudulent and manipulative acts and practices”.
Despite numerous legal challenges, Grayscale has made no progress with the Wall Street regulator, but as the largest asset manager on Earth, BlackRock may hold enough clout to make a valid argument.
But success for BlackRock is not a given, especially given its decision to enlist Coinbase as the ETF’s official custodian.
Coinbase is front and centre of the SEC’s increasingly hawkish stance on cryptoassets, having been slammed with a lawsuit alleging securities law violations at the Nasdaq-listed exchange.
Rival crypto exchange Binance is also being sued by the SEC.