BlackRock, the world's largest asset manager, is reportedly on the verge of filing an application for a Bitcoin exchange-traded fund (ETF), according to a Thursday Coindesk report. It plans to use Coinbase's custody services and spot market data for pricing
This news has stirred skepticism among industry experts, including Eric Balchunas, a global authority on ETFs. Balchunas highlighted that it would be uncharacteristic for the firm to file for a physical or futures ETF at this time.
James Seyffart, another keen observer of the ETF industry, commented on Balchunas' tweet, suggesting a filing for a spot Bitcoin ETF would be truly remarkable.The reason behind his emphasis lies in the different characteristics of futures and spot markets. Futures involve buying or selling an asset -- in this case, Bitcoin -- at a predetermined price at a specific future date. On the other hand, spot trading involves the immediate delivery, or "on the spot" exchange, of the asset.
As such, a Bitcoin ETF based on spot markets would entail BlackRock holding actual Bitcoin -- a move that would add considerable legitimacy and mainstream acceptance to the cryptocurrency. Notably, the U.S. Securities and Exchange Commission (SEC) is yet to approve a physical Bitcoin ETF despite approving a futures-based one in late 2021.
BlackRock, with roughly $10 trillion in assets under management, has a complex relationship with cryptocurrencies. Earlier in 2023, CEO Larry Fink emphasized the potential of tokenization over Bitcoin in his annual letter to investors.
In 2022, it launched an ETF tracking a basket of 41 blockchain-related companies, with Coinbase representing the largest share of the product's holdings. Despite this, BlackRock hasn't committed to a specific Bitcoin product.
In 2021, the asset management giant tested the waters by investing in Bitcoin futures, yet it hasn't embraced the leading cryptocurrency as many of its Wall Street counterparts have.