BlackRock and Bitwise Advance in Race for Spot Bitcoin ETF

Blackrock and Bitwise banners

BlackRock and Bitwise Asset Management have filed amended applications for spot Bitcoin exchange-traded funds (ETFs) with the U.S. Securities and Exchange Commission (SEC), signaling their confidence and readiness for launching the products.

BlackRock, the world’s largest asset manager, has designated Jane Street Capital and JPMorgan Securities as authorized participants (APs) for its iShares spot Bitcoin ETF, which would trade under the ticker IBTC on Nasdaq. APs are financial institutions that create and redeem shares of ETFs with the fund issuer, providing liquidity and efficiency to the market.

SEC’s Mandate to Approve of Deny Within Stipulated Time

Bitwise, a leading provider of crypto index funds, has injected $200 million in seed capital for its Bitwise Bitcoin ETF Trust, which would trade under the ticker BITB on NYSE Arca. The seed capital would help the fund achieve sufficient size and trading volume to meet the listing standards and attract investors.

Confirming this, Eric Balchunas, the Senior ETF analysts at Bloomberg share the news through a post on X. According to him,

“Bitwise S-1 has been filed and it looks like someone (I wonder who) is going to seed $BITB with $200m, which blows away BlackRock’s $10m (that we know of). That’s gonna be huge help in early days of race. No AP named but prob forthcoming.”

Both firms have filed their applications under the Securities Act of 1933, which requires the SEC to either approve or deny them within 240 days. The SEC has previously rejected several spot Bitcoin ETF applications under this act, citing concerns over fraud and manipulation in the underlying Bitcoin market.

Prospects Are Looking Bright for Spot Bitcoin ETF

However, the prospects for a spot Bitcoin ETF have improved recently, after the SEC approved several Bitcoin futures ETFs under the Securities Exchange Act of 1934, which has a different regulatory framework. The SEC has also been ordered by a court to review a spot Bitcoin ETF application from Grayscale Investments, which runs the largest Bitcoin trust in the world.

BlackRock and Bitwise are among the six financial firms whose spot Bitcoin ETF applications are currently under review by the SEC. The others are ARK Investment, Fidelity, Valkyrie, and VanEck. The SEC has until Jan. 10, 2024, to reach a final decision on BlackRock’s application, and until June 29, 2024, for Bitwise’s application.

Bitcoin Exposure for Investors

A spot Bitcoin ETF would allow investors to gain direct exposure to the current price of Bitcoin, without having to deal with the complexities and risks of buying and storing the cryptocurrency. A spot Bitcoin ETF would also have lower fees and tracking errors than a futures-based ETF, which has to roll over its contracts periodically and incur additional costs.

The approval of a spot Bitcoin ETF would be a major milestone for the crypto industry, as it would boost the adoption and legitimacy of Bitcoin as an asset class. It would also create more competition and innovation in the ETF market, which has seen explosive growth in recent years. According to ETF.com, there are more than 2,500 ETFs listed in the U.S., with over $7 trillion in assets under management.

Author: Jinka

Jinka is a self-trained crypto journalist, passionate about happenings in the industry.