Wednesday, December 8

Lending Platform BlockFi Files For Physically-Based Bitcoin ETF


Centralized cryptocurrency exchange and lending platform BlockFi is next in line to file for a Bitcoin ETF with the SEC. However, this ETF is intended to be backed by hard Bitcoin holdings, rather than futures contracts.

The BlockFi NB Bitcoin ETF

According to company documents filed earlier today, the “BlockFi NB Bitcoin ETF” (Ticker: BBBB) will issue shares that reflect the performance of Bitcoin held by the trust. It will direct a yet-unnamed custodian to buy or sell bitcoin on its behalf, in order to pay expenses or redeem shares. Each share will be priced daily based on Coin Metrics’ real-time reference rate on Bitcoin’s current value.

This contrasts with the Bitcoin ETFs which have been approved in the US thus far. Both the ProShares and Valkyries Bitcoin ETFs are backed by futures contracts, upon which they have a monthly holding limit. Based on its opening day success, the ProShares ETF approached that limit within days of its launch.

The Odds

Until now, all attempts at an ETF backed by physical Bitcoin have been denied. SEC chair Gary Gensler has repeatedly shown favorability towards Futures ETFs due to their regulatory protections. However, the success of the first Bitcoin futures ETFs last month may inspire confidence in the SEC to take the next step.

BlockFi isn’t the only one still trying, either. VanEck filed for a similar product, and Grayscale seeks to turn its massive Bitcoin fund into a publicly-traded ETF. According to Bloomberg analyst James Seyfart, the SEC’s decision on Vaneck’s spot Bitcoin fund is due on November 14th.

Though the SEC continues hesitating, its international counterparts are proving far more welcoming. Last month, Australian regulators issued guidelines on Bitcoin and Ethereum ETPs, signaling openness to the product. Meanwhile, the United States’ Canadian neighbors were the first country to approve a Bitcoin ETF – and now houses multiple.

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