Global financial behemoth, BlackRock Inc. has secured $100,000 in seed funding for its proposed Bitcoin exchange-traded fund (ETF), as per a recent Securities and Exchange Commission (SEC) filing.
The undisclosed investor, whose identity remains confidential, agreed to purchase $100,000 in shares in October, acquiring 4,000 shares at a per-share price of $25. This seed capital will be utilized for creating units underlying the ETF, allowing shares to be offered and traded on the open market.
Crypto Exchange-Traded Funds (ETFs) are investment vehicles that allow investors to gain exposure to the price movements of cryptocurrencies, including Bitcoin, without directly owning the digital assets.
They track the price performance of one or more cryptocurrencies by investing in a portfolio linked to their instruments. They trade on regular stock exchanges, allowing investors to hold them in their standard brokerage accounts.
Currently, spot ETFs, which directly invest in cryptocurrencies, have yet to receive regulatory approval in the U.S. However, the Securities and Exchange Commission (SEC) has approved other ETFs that use futures contracts to track cryptocurrency prices.
Bitcoin ETFs are exchange-traded funds that aim to mimic the price movements of Bitcoin. They use futures contracts to achieve this goal, and fund managers purchase these contracts and bundle them into a fund.
BlackRock’s proposed “iShares Bitcoin Trust” stands out from other applications by directly investing in Bitcoin rather than opting for futures tied to the cryptocurrency. There are more than ten other similar applications awaiting the approval of the US SEC.
The anticipation is that the Securities and Exchange Commission (SEC) will approve one or more spot ETFs early in 2024, with Bloomberg analysts estimating a high probability for approval in January.
The broader expectation is that the SEC will greenlight multiple spot Bitcoin ETFs simultaneously. This aligns with the recent surge in Bitcoin prices, surpassing $40,000, indicating a gradual rally fueled by expectations linked to the approval of a Bitcoin Spot ETF by the SEC.