BlackRock Secures Initial $100,000 Funding for Spot Bitcoin ETF, Paving Way for Approval in 2024
Summary:
In October 2023, BlackRock, the world's largest asset manager received $100,000 in initial funding from an undisclosed investor for its proposed spot Bitcoin exchange-traded fund (ETF), as per its latest SEC filing. The filing also gives insights into BlackRock's method for covering the sponsor's fee, which won't have a substantial impact on Bitcoin's price. Despite past denials, experts predict the SEC will approve its first spot Bitcoin ETF by early 2024.
In October 2023, BlackRock, the largest asset manager globally, secured initial funding of $100,000 from an unidentified investor toward its proposed spot Bitcoin exchange-traded fund (ETF), according to its most recent filing with the U.S. Securities and Exchange Commission (SEC). The SEC paperwork showed the investor's commitment to acquire 4,000 shares at $25 each on October 27, 2023, functioning as a statutory underwriter with regard to the Seed Creation Baskets.
Additional elements in BlackRock's latest filing provide insight into the asset manager's strategy for covering the sponsor's fee. Its intent is to source Bitcoin or cash as trade-credit from a lender over short periods. By doing this, BlackRock can apply its payment via a loan route, thereby eliminating the need to offload Bitcoin—the ETF's primary asset—minimizing impact on Bitcoin's market value.
In relation to this framework, the settlement of trade credits is planned for the business day directly after the execution date, invoking an 11% financing fee in addition to the daily divided federal funds target rate ((11% + fed funds target)/365). To illustrate, if the federal funds target rate on November 20, 2023, stood at 5.50%, the theoretical financing fee would equate to 16.5% divided by 365 from the loaned amount.
Reacting to these revelations, ETF analyst Eric Balchunas depicted the information as an intriguing development, albeit in the nerdiest vein.
BlackRock made history as one of the earliest institutional behemoths to lodge a spot Bitcoin ETF application in July, which is among the 13 currently under review by the SEC. Despite the SEC turning down spot Bitcoin ETF applications in the past, industry experts forecast that the first spot Bitcoin ETF in the U.S. is expected to earn approval sometime in early 2024.
Published At
12/5/2023 9:00:20 AM
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