In partnership with American cryptocurrency exchange Coinbase, investment management company BlackRock has filed an application for a spot Bitcoin Exchange Traded Fund (BTC ETF) with the United States Securities and Exchange Commission (SEC). BlackRock with up to $9.5 trillion in assets under management (AUM) is set to engage Coinbase Custody for the ETF while also using the crypto exchange’s spot market data for pricing.
Also, corporate investment banking giant BNY Mellon will act as the cash custodian.
BlackRock Partners With Coinbase
BlackRock’s work with Coinbase kicked off sometime in August last year when they both collaborated to provide BlackRock’s Aladdin institutional clients with direct access to digital assets. The Coinbase Prime platform was utilised in this deal and BTC was the first cryptocurrency to get listed.
Aladdin institutional clients who are also clients of the crypto exchange were given access to crypto trading, custody, prime brokerage, and reporting capabilities via Coinbase Prime.
SEC Rejects Spot Bitcoin ETF Applications
In the case of registering a Bitcoin ETF with the SEC, this has proven to be a herculean task over time, especially for spot market trading. The regulator has rejected a handful of applications for spot BTC ETF including that of Grayscale.
At the beginning of 2022, the SEC dismissed Fidelity’s Wise Origin Bitcoin Trust Spot ETF application. Last October, the SEC rejected WisdomTree’s spot BTC ETF proposal citing concerns about inadequate fraud and investor protections as reasons for the proposal rejection.
Cathie Wood’s ARK 21Shares also got denied the approval to list spot BTC ETF earlier this year by this same regulator. Sadly, this was the second time in a row that the investment manager’s proposal was getting rejected. So far, the SEC has not approved a single application for such a spot ETF citing potential fraud or manipulation in the spot market.
SEC Crackdown on Binance And Coinbase
At the same time, the regulator has been on a crackdown of the broad crypto industry with several enforcement actions being levied against crypto-related entities. The most recent is the lawsuits against two top digital asset service providers, Coinbase and Binance. They have both been charged for listing unregistered securities including BNB, SOL, BUSD, COTL, AXS, MANA, SAND, ADA, MATIC, and many others.
Binance and its Chief Executive Officer (CEO) Changpeng Zhao were also sued for misleading investors and flouting Know-Your-Customers (KYC) rules.