This week you could read in the Bitcoin news that BlackRock, the largest asset manager in the world, has a attempt ventures to a spot-based exchange-traded funds (ETF) for bitcoin (BTC) in the US market. It has submitted an application to the Securities and Exchange Commission (SEC), which has so far rejected all requests for a spot bitcoin ETF.
More precisely, BlackRock’s iShares unit has filed an application with the US financial regulator for the establishment of an iShares Bitcoin Trust. When hearing this name, many will immediately think of Grayscale’s bitcoin fund, called Grayscale Bitcoin Trust Fund (GBTC). What exactly is the difference between these two eponymous funds?
BTC spot ETF US trust
Both a spot ETF and a bitcoin trust like Grayscale offer traditional investors the opportunity to gain exposure to BTC without having to buy bitcoin directly.
A spot ETF buys bitcoins at the end of the trading day to align the fund’s assets with the trading price. This is not the case with a trust fund, so the price of a share does not correspond 1-to-1 with the bitcoin price. For example, during periods of high demand, investors may have to pay relatively more for GBTC shares than the current BTC price.
For example, currently you can buy a GBTC share at about a 40 percent “discount” from the bitcoin price.
Since BlackRock’s filing is for an iShares Bitcoin Trust, many investors initially thought of a fund similar to Grayscale’s. So it is important to understand that this is a spot ETF and so the value will directly match the price of BTC.
Does BlackRock stand a chance?
While the real Bitcoin purists may not be waiting for a party like BlackRock, many investors are still hoping that the US can finally get ready for a BTC spot ETF. With the history of the SEC, it seems almost impossible, as the regulator has dismissed every filing so far. Nevertheless, BlackRock has built up a good reputation over the years and it now seems to be putting its best foot forward again to launch a reliable stock exchange fund.
Of the total of 576 ETF applications from BlackRock, no fewer than 575 have been approved. This may offer a glimmer of hope for most of the bitcoin world.