BlackRock Bitcoin ETF application, making a case for SEC approval

• BlackRock has revealed a new strategy that could bolster its Bitcoin ETF application.
• The move involves collaborating with Nasdaq for a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin.
• The asset manager also detailed several aspects distinguishing its iShares Bitcoin Trust over others.
• The diligence comes as the SEC previously associated Bitcoin ETFs with market manipulation related to Bitcoin prices.

BlackRock recently applied for its iShares Bitcoin Trust with the US Securities and Exchange Commission (SEC), asking that the Exchange Traded Fund (ETF) be listed and traded on the Nasdaq stock exchange. The application made headlines across the crypto scene as market players remembered the federal regulator’s stand on this type of project in reference to market manipulation.

Also Read: BlackRock joins hand with Coinbase Custody for Bitcoin ETF application, undeterred by SEC vs Coinbase lawsuit

BlackRock has a strategy to convince the SEC

BlackRock has acted cognizant of the SEC’s stand, detailing a plan to convince the federal regulator on why its Bitcoin ETF should be approved. Based on recent data, the world’s largest investment manager has revealed plans to collaborate with Nasdaq, the global electronic marketplace for buying and selling securities.

Nasdaq comes in to work with BlackRock on a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin. The marketplace will help BlackRock try to put out the SEC’s concerns about market manipulation, potentially tipping the odds in favor of the asset manager’s application.

With this partnership, BlackRock aims to leverage Nasdaq’s expertise as a BTC spot trading platform to give the SEC more ‘field-vision’ into the Bitcoin market. With the agency having eyeshot into the BTC market, it would also help lower the chances for bad actors trying to manipulate the market.

BlackRock’s proposed Bitcoin ETF is different, here’s why

Several factors distinguish BlackRock’s proposed ETF. These include:

• Issued by Delaware statutory trust.
• Operates under a trust agreement between BlackRock (Trustee) and Delaware Trustee.
• Not structured as an investment trust, unlike other proposed Bitcoin ETFs.
• Will primarily hold BTC.
• Coinbase Custody Trust Company will be the main custodian for its Bitcoin holdings.
• Intended to reflect the Bitcoin price’s performance before the Trust’s expenses and liabilities are paid.

Notably, Grayscale Bitcoin Trust used the same custodian, and it [Grayscale] being the largest BTC investment trust and operating within the regulator’s good graces, it is reassuring that BlackRock will also be using it.  

However, one crucial difference between BlackRock’s iShares and that of Grayscale is that for the former, investors get an alternative method to achieve investment exposure to Bitcoin through the public securities market. The latter, however, is designed as a private placement strictly available to accredited investors.

It is also worth noting that Coinbase Custody Trust Company is not the only custodian or option, as several other proposed Bitcoin ETFs have demonstrated an intention to use other custodians or, worse, hold BTC directly. Such moves often put the project on the regulator’s radar.

Assessing the possibility of SEC approving BlackRock’s Bitcoin ETF

BlackRock’s reputation as a sturdy financial industry participant coupled with its successful record of accomplishment releasing well-to-do investment products, chances of the application going through are high. In a tweet, Bloomberg’s senior ETF analyst, Eric Balchunas, also seconded these qualifications.  

All these could bode well for the Bitcoin Trust application, increasing the SEC’s confidence in BlackRock’s ability to manage the risks associated with this offering.

Also Read: Coinbase, SEC executives’ fireside chat shows everyone is talking past each other