BlackRock’s Spot Bitcoin ETF Is Not the Same as Grayscale’s Product, Experts Say
Exchange Traded Funds (ETFs) can be confusing. Fund management giant BlackRock’s application for an ETF that tracks Bitcoin has raised questions.
Recap: BlackRock (BLK), iShares, filed a filing with the U.S. Securities and Exchange Commission on Thursday to form the iShares Bitcoin Trust.
BlackRock’s proposal, with its name and other details, caused some confusion among industry experts as to whether it was a request for an ETF (Exchange Traded Fund) or a trust that had similar characteristics to the Grayscale Bitcoin Trust .
Both are correct.
Noelle Acheson is the editor of Crypto is Macro Now. She said, “It’s a reminder of how complicated ETF terminology is.” BlackRock’s proposal is technically a trust. However, redemptions are possible, so it works like an ETF.
Acheson pointed out that iShares is not comparable to GBTC in this respect as it does not have a redemption mechanism. Acheson explained that the market expects GBTC to have no redemptions as this is referred to as ‘confidence’. But that is not true.
The main difference is that a spot ETF “would be able to buy bitcoin at the close of the trade to match its assets to the trade price.” Joe Consorti said a trust could not perform this function.
A trust can trade at a discount to net asset value, sometimes for a large amount. This has been the case at GBTC for many years.
Grayscale’s trust has been attempting to convert to a bitcoin spot ETF for some time, but the SEC has denied the attempt, citing concerns about market manipulation, among other things.
BlackRock hopes to overcome the market manipulation, with AskFX reporting earlier Friday that the fund manager’s filing includes the promise of a “monitor-sharing agreement” between exchanges.
