According to a Thursday CoinDesk story, BlackRock, the largest asset manager in the world, is apparently close to submitting an application for a Bitcoin exchange-traded fund (ETF). For pricing, it intends to use Coinbase’s custodial providers and spot market data.
Traders have expressed skepticism about this information, including Eric Balchunas, a leading expert on ETFs. Balchunas emphasized that applying for a physical or futures ETF at this time might be out of character for the agency.
Another enthusiastic observer of the ETF market, James Seyffart, responded to Balchunas’ tweet by saying that a proposal for a spot Bitcoin ETF would be very fantastic.
His emphasis can be understood in light of the fundamentally distinct characteristics of futures and spot markets. With futures, you may buy or sell an asset—in this example, Bitcoin—at a specified price at a specific future date. On the other hand, quick supply, or “on the spot” change, of the asset is included in spot buying and selling.
As a result, a Bitcoin ETF based solely on spot markets would need BlackRock to hold precise Bitcoin, a move that might significantly increase the cryptocurrency’s credibility and level of acceptability among the general public. Notably, the Securities and Trade Commission (SEC) of the United States has yet to approve a physical Bitcoin ETF while having already approved a futures-based one in late 2021.
With about $10 trillion in assets under management, BlackRock has a complicated relationship with cryptocurrencies. In his annual letter to traders earlier in 2023, CEO Larry Fink stressed the advantages of tokenization over Bitcoin.
It debuted an ETF in 2022 that tracked a basket of 41 blockchain-related companies, with Coinbase accounting for the largest proportion of the product’s assets. Despite this, BlackRock hasn’t made a commitment to a specific Bitcoin product.
The asset management giant invested in Bitcoin futures in 2021 to test the waters, but it hasn’t fully embraced the dominant cryptocurrency like many of its Wall Street competitors have.
