BlackRock is continuing to move ahead with plans for its proposed spot Bitcoin exchange-traded fund (ETF). The asset management giant filed an amended Form S-1 with the SEC on Monday, December 4, 2023, its second such amendment as it seeks regulatory approval for the new investment vehicle.
While the Securities and Exchange Commission has yet to approve a spot Bitcoin ETF in the U.S., optimism is growing that 2023 could finally be the year. BlackRock’s latest filing provides new details about the structure and operations of its proposed “iShares Bitcoin Trust.”
The fund aims to give investors exposure to Bitcoin’s price movements by holding the cryptocurrency directly, unlike Bitcoin futures ETFs already trading. It has named service providers like crypto exchange Coinbase as custodian and prime broker.
The new filing comes on the heels of the collapse of former Binance CEO, Changpeng Zhao, which has resurfaced concerns about risk and criminality in the industry. It remains unclear if regulators will greenlight spot Bitcoin ETFs this year, but BlackRock’s continued efforts signals that the “wheel is still turning,” according to James Seyffart , a key analyst at Bloomberg.
BlackRock’s latest amendment to its proposed spot Bitcoin exchange-traded fund (ETF) aims to reassure regulators by emphasizing safeguards to protect investor assets, following recent turmoil in the crypto industry.
Senior ETF analyst at Bloomberg, Eric Balchunas, shared in an X post that the latest conversations between BlackRock and the SEC were exhaustive and could well be the final meetings before approval.
The filing explains that customer Bitcoins will be custodied in a combination of “omnibus cold wallets” and “omnibus hot wallets” by the ETF’s designated custodian and prime broker, Coinbase. The custodian keeps the majority of assets offline in cold storage for security.
It also notes that Coinbase conducts “blockchain analytics screening” to mitigate risks from transacting with sanctioned entities. If screenings flag funds as suspicious, the custodian can block deposits to the ETF.
To further limit counterparty risk, BlackRock states it will only work with registered broker-dealers and qualified custodians that have implemented compliance programs around anti-money laundering regulations.
The document additionally details emergency procedures in case Coinbase ceases operations, including the ability to appoint a new custodian. However, it warns that it could pose challenges for safeguarding the ETF’s Bitcoin.
Furthermore, the new filing also included a financial statement that itself had been audited by top accounting firm PwC , another prudent measure to keep regulators on side.