BlackRock Gets $100k Seed Funding for Bitcoin ETF, Anticipates First SEC Approval by 2024
Summary:
BlackRock, the leading asset management firm, secured $100,000 in initial funding from an anonymous investor for its Bitcoin spot exchange-traded fund (ETF) in October 2023, according to its newest SEC filing. The firm intends to cover the sponsor's fee by short-term borrowing of Bitcoin or cash, thus reducing the potential impact on the Bitcoin price. Settlement of trade credits is planned for the day after the execution date, with a certain financing fee involved. The firm, an early applicant for a Bitcoin ETF, awaits an SEC decision on one out of 13 submissions. Experts forecast the first US Bitcoin ETF approval by 2024.
BlackRock, the world's leading asset management company, reported in its newest filing with the United States Securities and Exchange Commission (SEC) that it had obtained $100,000 in initial funding for its Bitcoin (BTC) spot exchange-traded fund (ETF) from an anonymous investor in October 2023. According to the SEC document, the investor made a commitment on October 27, 2023, to purchase a total of 4,000 shares at $25.00 each, summing up to the aforementioned amount. The investor is also noted to be serving as a statutory underwriter concerning the Seed Creation Baskets.
The newly published filing by BlackRock offers insights into how the asset management firm intends to cover the sponsor's fee. The proposed method involves short-term borrowing of Bitcoin or cash from a trade credit provider to use as a trade credit. This enables BlackRock to levy their charges through a loan instead of selling BTC, the underlying asset of the ETF, thus, minimizing the effect on the BTC price.
In connection with this borrowing method, the arranged settlement of trade credits is slated to occur the business day following the date of the agreement. This arrangement invokes a financing fee that's arrived at by adding 11% to the federal funds target rate and then dividing the total by 365 ((11% + fed funds target)/365). For instance, if on November 20, 2023, the fed funds target rate stood at 5.50%, the corresponding financing fee would be the sum of 11% and 5.5%, divided by 365, applied to the borrowed sum.
The disclosure triggered ETF analyst Eric Balchunas to state that he found it intriguing in the most geeky way possible.
One of the frontrunners among institutional giants to apply for a Bitcoin spot ETF, BlackRock submitted its application in July. The SEC has yet to decide on the application, which is one of 13 currently under review. Despite earlier rejections of Bitcoin spot ETF applications by the SEC, industry insiders predict that by the beginning of 2024, the first Bitcoin spot ETF likely will be approved in the United States. An intriguing note on Helsinki's contribution to the crypto universe is that a small $5 purchase could have yielded 5,050 Bitcoins back in 2009.
Published At
12/5/2023 12:00:20 PM
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