BlackRock Secures $100,000 in Seed Funding for Bitcoin ETF Proposal
BlackRock, the world’s largest asset manager, has received $100,000 in seed funding from an undisclosed investor for its spot Bitcoin ETF proposal. This information was disclosed in the company’s recent filing with the United States Securities and Exchange Commission (SEC).
Details of the Seed Funding
According to the SEC document, the anonymous investor purchased 4,000 shares at $25.00 per share on October 27, 2023. This investment amounts to a total of $100,000. The investor played a key role as a statutory underwriter for the Seed Creation Baskets.
BlackRock’s Strategy for Managing Sponsor’s Fee
BlackRock’s filing also reveals its strategy for managing the sponsor’s fee. The asset manager plans to borrow Bitcoin or cash as credit on a short-term basis from a trade credit lender. By charging fees through a loan instead of selling the ETF asset (BTC), BlackRock aims to avoid significant fluctuations in the BTC price.
The trade credits will be settled on the business day after the execution date and will incur a financing fee of 11% plus the federal funds target rate divided by 365.
Recent Amendments to the Bitcoin ETF Proposal
BlackRock recently submitted an updated S-1 form for its proposed Bitcoin ETF, introducing 21 amendments. These amendments address various aspects such as custody arrangements, valuation policies, fork handling procedures, risk disclosures, and cash management protocols.
The objective of these amendments is to enhance security measures for private keys and Bitcoin holdings, ensure transparent valuations, streamline operational processes involving entities like the Bitcoin Custodian and Prime Broker, and establish contingency plans for disruptive events.
The filing also highlights the regulatory considerations in jurisdictions like the UK and EU that Bitcoin ETFs must navigate.
Hot Take: BlackRock Makes Progress Towards a Bitcoin ETF
BlackRock’s securing of $100,000 in seed funding for its Bitcoin ETF proposal shows that the asset manager is actively working towards launching a Bitcoin ETF. The company’s strategy for managing the sponsor’s fee demonstrates its commitment to minimizing market impact. With recent amendments addressing crucial aspects of the proposed ETF, BlackRock is taking steps to enhance security, transparency, and operational efficiency. As the landscape for Bitcoin ETFs continues to evolve, BlackRock is positioning itself to navigate regulatory considerations effectively. This development signals increasing interest and investment in cryptocurrencies from institutional players like BlackRock, which could have significant implications for the broader adoption of Bitcoin.
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