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Amid regulatory pressure, asset management giant BlackRock has submitted an application for a physically-backed Bitcoin ETF.

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To date, the SEC has not approved any applications for such spot ETFs, including Grayscale, VanEck, and WisdomTree, due to concerns about potential fraud or manipulation in the spot market.

Original Title: "Under Regulatory Pressure, Asset Management Giant BlackRock Submits Application for Bitcoin ETF"

Original Source: BitpushNews

According to a public document, on the afternoon of June 15th New York time, investment management giant BlackRock submitted an application for a spot Bitcoin ETF to the US Securities and Exchange Commission (SEC).

This move comes as the encryption industry is embroiled in a regulatory battle with the US SEC for suspected violations of securities laws. Earlier this month, the SEC sued top exchanges Coinbase and Binance.

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As of March 2023, BlackRock manages assets worth $91 trillion. The company outlined its plan for the iShares Bitcoin Trust fund in a document, which involves appointing Coinbase Custody as the custodian for Bitcoin and Mellon Bank of New York as the cash custodian. The product in the plan will use Bitcoin reference rates from CF Benchmarks, a subsidiary of Kraken, which collects price data from exchanges to continuously track spot pricing.

BlackRock previously established a partnership with Coinbase in August of last year, allowing clients to use BlackRock's investment management platform, Aladdin, to own and trade digital assets, starting with Bitcoin. Through this transaction, BlackRock's clients can use Coinbase's trading, custody, institutional brokerage, and reporting services.

Before establishing a connection with Coinbase, BlackRock launched the iShares and Blockchain Technology ETF (IBLC) in April 2022. Over a year after its listing, the assets managed by IBLC were only $7 million, despite the fund's 75% increase year-to-date.

Regulatory Resistance

Registering a Bitcoin ETF in the United States has always been a difficult task, especially for funds that deal with spot market trading. So far, the SEC has not approved any such spot ETF applications due to concerns about potential fraud or manipulation in the spot market, including those from Grayscale, VanEck, and WisdomTree. 21Shares and Cathie Wood's Ark Investment have also been trying to register a spot Bitcoin ETF since 2021.

By contrast, the agency has already approved four Bitcoin futures ETFs. The largest of these is the ProShares Bitcoin Strategy ETF (BITO), which manages assets of approximately $800 million. According to FactSet data, the fund has suffered total losses of over 40% since its launch. Bitcoin hit a historic high shortly after the launch of BITO, but has since fallen by more than 60% from its peak.

Grayscale has already filed a lawsuit against SEC's rejection of its proposal to convert Bitcoin Trust into a spot ETF. It is expected that the court will make a decision on the case later this year.

If ETFs begin trading, they typically take several months to launch after the initial application. Aisha Hunt, head of asset management law firm Kelley Hunt & Charles, is not optimistic about this and stated in a tweet that BlackRock's application may face strong resistance from the SEC and may ultimately be withdrawn.

Impact on the Industry

BlackRock CEO Larry Fink has also expressed optimism about cryptocurrency technology in the past year. He said at the New York Times summit in November last year that tokenized securities are "the next generation of the market".

BlackRock's application for a spot Bitcoin ETF may mark a turning point for the industry, as well-known participants in the traditional financial sector recognize the potential of Bitcoin. If the SEC relaxes its policies, these products may flood the market, providing investors with safer investment opportunities to participate in the Bitcoin market through regulated and easy-to-use investment tools, which will open the door to a new wave of cryptocurrency adoption.