BlackRock Applies To Launch Bitcoin Spot ETF; Is this a Good Thing?

BlackRock’s ambition to be in sync with the industry is a clear sign that cryptocurrencies are here to stay. But some people think it’s not a good sign for retail investors.

On June 15, BlackRock, the world’s dominant asset manager with over $8 trillion in assets, officially filed with the US Securities and Exchange Commission (SEC) to establish a Bitcoin Spot ETF. This new fund will be called iSHARES BITCOIN TRUST.

First-Ever Bitcoin Spot ETF

Earlier news reported that the corporation was in the process of finalizing its application for a Bitcoin ETF (Bitcoin exchange-traded contract), according to a source familiar with the matter.

Once approved, the Bitcoin ETF will be added to BlackRock’s wide range of financial services and products, paving the way for a potential surge in institutional adoption of digital assets.

BlackRock, the influential financial powerhouse, is set to leverage Coinbase Custody, provided by Coinbase (COIN), as the trusted storage solution for its upcoming Bitcoin ETF. A reliable source reveals that BlackRock will rely on the live crypto exchange market data from Coinbase to determine accurate pricing for the ETF.

The specific structure of the ETF is yet to be confirmed, which has led to controversies about whether it’s a spot ETF or a future ETF. There are currently a number of future ETFs but there is no spot ETF. If the new offering is Bitcoin spot ETF, it could indicate that BlackRock holds a massive amount of BTC in its reverses.

BlackRock has been collaborating with Coinbase since the latter half of last year, with the aim of making cryptocurrencies more accessible to institutional investors. However, BlackRock’s efforts could rock the boat, given the current legal battle between Coinbase and the SEC.

Apart from that, the regulatory authority has thus far rejected applications for a spot Bitcoin ETF. Nevertheless, the SEC has given the green light to several contract-based ETFs.

As a formidable presence on Wall Street, BlackRock holds significant influence in shaping investment trends and driving market dynamics. With an impressive portfolio, BlackRock manages vast amounts of capital, totaling a staggering $10 trillion. The company made its entry into the cryptocurrency market in August 2022 with the launch of the Bitcoin Private Trust.

Unwelcome Whale

While BlackRock’s latest move brings up excitement, it also fuels frustration among the community. Many warn that it could violate the “ethos” of decentralization. Others argue that it’s just a money game of BlackRock.

Scott Melker, the famous host of The Wolf of All Streets, said that if the Wall Street whale obtains the approval, “it kind of violates the ethos, it is a bit of a dishonest push away from the people who built the industry in the United States.” However, Melker agreed that the new offering would bolster institutional investors’ confidence in the market, leading to more adoption.

Cinneamhain Ventures partner Adam Cochran and other experts predict that BlackRock, along with other institutional players, will seize the opportunity to acquire discounted coins from retail investors.

They believe that Wall Street firms will continue to enter the crypto space, and U.S. regulators are likely to favor them over existing platforms. This could result in the majority of Bitcoin ownership being concentrated in the hands of institutions like BlackRock and Goldman Sachs.

Supporting this view, Steven Lubka, a managing director at Swan Bitcoin, echoes the prediction that Bitcoin (BTC) will eventually reach an impressive value of $1 million.

However, Lubka suggests that the majority of retail investors may not fully reap the benefits of this surge, as a significant portion of BTC will likely be owned by institutional players such as BlackRock, Goldman Sachs, and other ETF issuers.