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BlackRock Launches Bitcoin Private Trust after Building Partnership with Coinbase

Days after BlackRock, the world’s largest investment management company in the world, entered into a partnership with Coinbase to offer its institutional clients access to cryptocurrency trading services, the firm announced the launch of a spot Bitcoin Private Trust.

The company said the new product will be available to its institutional clients in the United States. The product will seek to track the performance of Bitcoin and will come with fewer expenses and liabilities for the trust in general.

While the first half (H1) of the year was filled with a lot of uncertainty as it concerns investment in the digital currency ecosystem, BlackRock said it has continued to see significant demand from clients that want exposure to digital currencies by leveraging its technology and market expertise.

The investment company, which holds more than $10 trillion in Assets Under Management (AUM), said it couldn’t resist providing an avenue to help its clients make the most secured investment in crypto should they have to. The company said the reason why the trust product is focused on Bitcoin is not far-fetched and is based on the fact that the digital asset is the oldest and most liquid of all cryptocurrencies.

While it was not made clear whether the spot Bitcoin private trust product has any affiliations with Coinbase Global, BlackRock did acknowledge that its clients will be able to leverage “Coinbase’s comprehensive trading, custody, prime brokerage, and reporting capabilities, common clients will be able to manage their bitcoin exposures alongside their public and private investments.”

BlackRock has long focused on the crypto sector, and the financial behemoth said its core focus in the industry remains permission blockchains, stablecoins, crypto assets, and tokenization.

With the backing of the most revered cryptocurrency exchange in the US, BlackRock hopes it will be able to provide its clients with the convenience they need to bet on crypto in a safe and regulated manner.

BlackRock Bitcoin Private Trust to Be Benchmarked by Kraken's CF Benchmarks Bitcoin Index

The world’s largest investment management firm BlackRock’s Bitcoin Private Trust will use the Kraken subsidiary CF Benchmarks Bitcoin Index as a benchmark for issuance, The Block reported.

Last month, BlackRock partnered with Coinbase to provide its institutional clients with cryptocurrency trading services. A few days later, the company announced the launch of the Bitcoin Private Trust, a Bitcoin Spot.

The product will seek to track Bitcoin’s performance and will bring fewer fees and debt to the trust company.

CF Benchmarks is a member of the Crypto Facilities group of companies and a member of the Payward Group of owners and operators of cryptocurrency exchange Kraken Exchange.

“Despite the sharp decline in the digital asset market, we continue to see strong interest from some institutional clients on how to leverage our technology and product capabilities to efficiently and cost-effectively access these assets,” BlackRock said in a statement.

The investment firm holds more than $10 trillion in assets under management (AUM).

Sui Chung, CEO of CF Benchmark, noted that institutional interest has increased over the past few months compared to six months ago and added that:

“The understanding of digital assets themselves is much greater than it was, people we talk to now understand the difference between bitcoin and ether.”

CF Benchmarks is trying to become the MSCI index of the crypto world.

The S&P Dow Jones Indices, a global leader in providing investable and benchmark indices to the financial launched index funds for cryptocurrencies in 2021.

BlackRock has long been focused on the crypto space, and the financial giant said its core focus in the industry remains on permissioned blockchains, stablecoins, cryptoassets, and tokenization.

Blackrock Rollouts Blockchain ETF for European Investors

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BlackRock, a New York-based US multinational investment company, has expanded its crypto service offerings by launching a new exchange-traded fund (ETF) that provides exposure to blockchain and crypto companies for its European customers.

The global investment manager announced on Thursday that it introduced the iShares Blockchain Technology UCITS ETF to its suite of products, thus giving European clients similar exposure to an ETF product launched in the US earlier this year.

Blackrock said the iShares Blockchain Technology UCITS ETF is designed to track the New York Stock Exchange FactSet Global Blockchain Technologies capped index. The new blockchain fund is listed on the pan-European stock exchange Euronext under the ticker BLKC and has a total expense ratio (TER) of 0.50%.

Blackrock said it designed the new fund for investors who want exposure to a wide variety of companies that are involved in the development, innovation, and use of blockchain and crypto technologies.

The new index tracker comprises 35 companies across the globe from developed and emerging markets. 75% of the companies included in the fund have a primary business related to the blockchain ecosystem, including crypto miners and exchanges. The other 25% is comprised of firms that support the blockchain ecosystem, such as semiconductor and payment firms.

The largest allocations of the fund are awarded to crypto exchange Coinbase, trading giant Galaxy Digital, and Bitcoin miner Marathon Digital. Others also include PayPal, Nvidia, and IBM.

Omar Moufti, product strategist for thematic and sector ETFs at BlackRock, commented about the development: We believe digital assets and blockchain technologies are going to become increasingly relevant for our clients as use cases develop in scope, scale and complexity. The exposure offered by the iShares Blockchain Technology UCITS ETF will allow our clients the opportunity to engage with global companies leading the development of the emerging blockchain ecosystem.”

The new development marks BlackRock’s continued efforts toward expanding its presence in the digital assets space. In April, the firm launched a similar blockchain ETF – iShares exchange-traded fund (ETF) – that allows US investors to gain exposure to the blockchain and crypto market without directly investing in cryptocurrency. Early last month, BlackRock partnered with Coinbase exchange to provide its U.S.-based institutional clients with direct exposure to the world’s largest cryptocurrency (Bitcoin).

The crypto exchange-traded fund (ETF) market is becoming competitive in Europe due to increasing customer demand. Investment products are proving to be a popular way for European institutional investors to gain access to crypto. In May, Crypto investment giant Grayscale expanded its operations by launching a new crypto-linked ETF in Europe.

Circle Has Started Building New Reserve Funds With BlackRock

Circle, the Web3.0 unicorn that is in charge of the issuance and maintenance of the USD Coin (USDC) stablecoin, has revealed it has started building a new and robust reserve fund dubbed the Circle Reserve Funds.

According to Jeremy Fox-Geen, the company’s Chief Financial Officer, the new Circle Reserve Funds are lodged with BlackRock, further deepening its relationship with the world’s largest asset management firm.

The new reserve fund will be managed by BlackRock advisors and it will predominantly be dominated by cash and short-dated US Treasuries. As Jeremy noted, as the existing USDC Treasury matures, funds from the reserve treasury will be pulled to secure the replacement of the reserve to continually guarantee 1:1 access to users’ funds.

“The Circle Reserve Fund is only available to Circle. As our existing Treasury holdings mature, the proceeds will be used to purchase new Treasuries by the Circle Reserve Fund,” Jeremy wrote in the official announcement, “We began this process on November 3, 2022, and expect to be fully transitioned by the end of Q1 2023. The Fund is custodied at Bank of New York Mellon, which already serves as the custodian for the Treasuries that comprise the USDC reserve today.”

Stablecoin issuers are uniquely poised for extra scrutiny from regulators, market observers, and the ecosystem at large. While Circle has not been embroiled in any form of price manipulation or improved alternative asset backing for its stablecoin, its major competitor, Tether Holdings have had to respond to lawsuits and allegations directly claiming its trading and reserve asset’s impropriety.

Circle’s USDC is currently the world’s second-largest stablecoin after Tether and it has a market capitalization of $42.2 billion at the time of writing, riding on its growing utility. Per the plans to bolster its reserve, USDC will now be at a vantage point to truly live up to its name and remain stable across the board.

BlackRock CEO Highlights Digital Assets and Tokenization

The Chief Executive Officer of the American investment firm BlackRock, Larry Fink, sent an annual letter to the board of directors in which he emphasized the possibilities of digital assets and tokenization for the asset management business. Fink made notice of the continued interest in these kinds of assets, notwithstanding the disaster that occurred with FTX, and he brought attention to the “interesting changes” that have been taking place in this sector.

Particularly, Fink mentioned the “dramatic gains” that have been made in digital payment systems, which are contributing to the progression of financial inclusion in developing countries such as India, Brazil, and Africa. This is crucial since the residents of these communities may not have access to standard financial institutions due to a lack of availability.

Tokenization, which refers to the act of putting assets or securities on a blockchain as digital tokens, may also give advantages, like enhanced liquidity and transparency. It’s possible that BlackRock, which is the biggest asset manager in the world, will be in a good position to capitalize on these trends in the years to come.

It is important to remember that BlackRock has in the past indicated that it is interested in the bitcoin and blockchain industries. In 2018, the corporation established a working group to investigate possible applications for blockchain technology. Two years later, in 2020, the company raised its interests in two Bitcoin mining companies that are publicly listed.

In general, Fink’s letter sheds insight on the increasing interest that the asset management sector is showing in digital assets and tokenization, as well as the potential that these two trends have. It will be fascinating to see how BlackRock and other big financial organizations adapt to new technological developments and integrate these trends into their business plans as technology continues to evolve.

BlackRock's Bitcoin Strategy: Mining Investments and ETF Proposals

The fact that BlackRock, the biggest asset management in the world, has been making substantial movements in the Bitcoin area recently demonstrates the firm’s optimism over the future of the cryptocurrency. This article dives into recent business endeavours undertaken by BlackRock, such as investing in Bitcoin mining businesses and putting out a proposal for a Bitcoin exchange-traded fund (ETF).

Investment Opportunities in Bitcoin Mining

BlackRock has achieved a key place for itself in the cryptocurrency mining industry. The massive investment firm is now the second-largest shareholder in four of the top five Bitcoin miners in terms of market value. To be more specific, as of the 30th of June, BlackRock Fund Advisors boosted their shares in these mining businesses. Notable investments were made in Riot Platforms Inc., Marathon Digital Holdings, Cipher Mining, and Terawulf.

Riot Platforms, Inc. (NASDAQ: RIOT) is a global leader in Bitcoin-centric infrastructure. The company is committed to making a positive impact through innovation and community partnerships. Riot specializes in Bitcoin mining and digital infrastructure, with vertically integrated operations that include data center hosting in central Texas and electrical engineering in Denver, Colorado.

Marathon Digital Holdings is a digital asset technology firm with a focus on bolstering the Bitcoin ecosystem. The company is on track to become one of North America’s largest and most eco-friendly Bitcoin mining operations.

Cipher Mining is a U.S.-based industrial-scale Bitcoin mining firm committed to fortifying the Bitcoin network’s infrastructure. With a management team experienced in technology, fintech, and finance, the company aims to provide a robust foundation for Bitcoin’s future growth.

Terawulf is a U.S.-based Bitcoin mining firm dedicated to advancing a zero-carbon future. The company owns and operates integrated mining facilities in key U.S. locations, focusing on sustainable community benefits and attractive investor returns.

A proposal for a Bitcoin exchange-traded fund (ETF)

BlackRock’s newly unveiled Bitcoin exchange-traded fund (ETF) has captured significant attention. An ETF is an investment vehicle designed to mirror the behavior of a specific asset or group of assets. For Bitcoin, such an ETF would allow investors to follow the cryptocurrency’s price fluctuations without the necessity of holding it directly.

BlackRock’s position as the biggest asset manager in the world gives its application credence, despite the U.S. Securities and Exchange Commission’s (SEC) past reluctance to approve Bitcoin ETFs. Financial industry professionals are optimistic that BlackRock’s ETF proposal will be approved in the near future, including Galaxy Digital CEO Mike Novogratz.

The idea of a Bitcoin ETF is not new, but BlackRock’s latest proposal has reopened the debate over whether such an investment vehicle could ever operate.It is important to note that the SEC has in the past given its blessing to exchange-traded funds (ETFs) that follow cryptocurrency futures or corporations with indirect crypto exposure. On the other side, the intention of BlackRock’s proposition is to follow the spot price of bitcoin.

The final word

The increasing interest shown by financial institutions in bitcoin is highlighted by BlackRock’s recent forays into the space, which include investments in mining operations and suggestions for exchange-traded funds. BlackRock is making some aggressive efforts in this field, and although the future of Bitcoin is still unclear, these initiatives might possibly have an effect on the way cryptocurrency investments develop.

BlackRock’s endeavours serve as a testimony to Bitcoin’s expanding importance in the financial landscape and are being watched closely by the cryptocurrency sector as it awaits the SEC’s verdict on the proposed ETF. The effects that these projects will have on the bitcoin market as a whole won’t be known for some time.

Floki Enters the Tokenization Arena with TokenFi Launch

Floki has unveiled its new platform, TokenFi, aimed at easing the crypto and asset tokenization process. This revelation comes at a time when the tokenization domain is foreseen to swell to a staggering $16 trillion by 2030. The announcement made on October 26, 2023, underscores Floki’s strategic intent to carve a niche in this trillion-dollar realm, further amplified by the backing of BlackRock, the world’s premier institutional investor overseeing $10 trillion in assets. BlackRock’s endorsement, referring to tokenization as “the next evolution in markets”, adds a layer of institutional credibility to the sector’s prospective expansion.

Scheduled for a comprehensive reveal on October 27, 2023, TokenFi, with its token ticker “TOKEN”, aspires to demystify the tokenization journey, striving to ascend as the apex tokenization platform globally. The platform’s token specifics are as follows:

Token Name: TokenFi

Token Ticker: TOKEN

Total Supply: 10 billion tokens, equally distributed across BSC and ETH chains.

Launch Market Cap: Circulating – $50,000, Diluted – $500,000.

Targeted Industry: Tokenization, Real World Assets, Launchpad.

Initially, a 10% token supply will grace Liquidity Pools on Uniswap and PancakeSwap to foster public liquidity and trading, set to commence at 3 PM UTC on October 27, 2023.

TokenFi has also inked a strategic alliance with DWF Labs, its prime institutional partner and market maker, along with a pivotal partnership with World Table Tennis to broaden its outreach to a colossal audience of 120 million individuals. The meticulous design of TokenFi is not just a flight of fancy; several products are already in the advanced development stage on testnet, poised for a Q4 2023 launch. Besides, a dedicated staking program for FLOKI holders is in the pipeline, set to roll out a few hours post-TokenFi’s launch, thus reinforcing the ecosystem’s stability.

The launch also entails a well-thought-out plan to mitigate sniping activities during the initial trading hours. A 1% wallet cap of the total supply and a 20% buy/sell transaction tax will be enforced in the first hour of trading, transitioning to a 5% tax post the first hour, subject to a subsequent DAO vote.

BlackRock and SEC Discuss iShares Bitcoin Trust Listing on Nasdaq

On November 20, 2023, a critical meeting was held between the United States Securities and Exchange Commission (SEC) and representatives from BlackRock, Inc., and the Nasdaq Stock Market LLC. The meeting’s primary focus was the discussion of the iShares Bitcoin Trust and its potential listing on Nasdaq as a spot Bitcoin exchange-traded fund (ETF).

The SEC’s Division of Trading and Markets hosted the meeting, attended by key personnel including David Shillman, Tom McGowan, Randall Roy, Ray Lombardo, Molly Kim, Edward Cho, Sarah Schandler, and Stacia Sowerby. Representing BlackRock were Rachel Aguirre, Adithya Attawar, Shannon Ghia, Robert Mitchnick, Charles Park, Marisa Rolland, and Ben Tecmire. Additionally, Eun Ah Choi, Jonathan Cayne, Giang Bui, and Ali Doyle represented The NASDAQ Stock Market LLC.

BlackRock’s presentation to the SEC included a detailed exposition of two potential models for the iShares Bitcoin Trust: the “In-Kind Redemption Model” and the “In-Cash Redemption Model.” These models outlined the mechanics of how the ETF could operate, focusing on the redemption process involving market makers, bitcoin custodians, and various exchanges.

The In-Kind Redemption Model entails a process where the ETF issuer instructs the Bitcoin Custodian to release bitcoin to a market maker, who may then unwind the bitcoin position. This model involves various parties, including a U.S. Registered Broker/Dealer, spot crypto exchanges, and a listing exchange.

The In-Cash Redemption Model, on the other hand, involves the ETF issuer trading with the market maker to sell bitcoin for USD. This model includes additional steps involving the Bitcoin Custodian moving cash out of cold storage and the market maker delivering shares to the Transfer Agent via an Authorized Participant.

The SEC’s response to BlackRock’s presentation and proposed models remains unclear, with no information on whether the SEC plans to approve the listing of a spot Bitcoin ETF. The approval of such an ETF would represent a major milestone in the acceptance of cryptocurrency in mainstream financial markets.

This meeting comes amid ongoing reviews by the SEC of various proposals for spot crypto ETFs from several firms, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, and Bitwise, alongside BlackRock. The push for a spot Bitcoin ETF has seen several delays and denials, creating a sense of anticipation and uncertainty in the crypto and financial markets.

The SEC has also met with executives from Grayscale on the same day to discuss their proposal for a Bitcoin ETF. The meeting with BlackRock and the ongoing reviews indicate the SEC’s active engagement in understanding and potentially integrating cryptocurrencies into regulated financial products.

BlackRock’s application to list a spot Bitcoin ETF on the Nasdaq was initially filed in June 2023. The discussion around Bitcoin ETFs has been fueled by a 2019 video of SEC Chair Gary Gensler, where he criticized the commission’s “inconsistent” approach to Bitcoin products. The approval of a spot Bitcoin ETF by the SEC would be a landmark decision, potentially paving the way for wider acceptance and integration of cryptocurrencies in the mainstream financial sector.

BlackRock and ARK Invest Conform to SEC's Cash Redemption Model for Bitcoin ETF

Major companies in the market, such as BlackRock and ARK Invest, have modified their S-1 registration statements in order to comply with the requirements imposed by the United States Securities and Exchange Commission. When it comes to their planned spot Bitcoin exchange-traded funds (ETFs), this update includes a significant move toward a cash redemption approach.

This strategic decision, which was signified by the submission of these revisions on December 18, 2023, symbolizes the embrace of a cash creation and redemption model over the in-kind redemptions that had been pursued in the past. Generally speaking, in-kind redemptions entail transactions that do not require monetary exchanges, such as the direct use of Bitcoin (BTC). This adjustment is in accordance with the standards that have been established by the Securities and Exchange Commission (SEC) of the United States.

The ARK 21Shares Bitcoin ETF is particularly mentioned in the registration statement of ARK Invest, which highlights the company’s change to accepting solely cash creations and redemptions. When it comes to prospective in-kind agreements, the statement does provide opportunity for them; however, this is contingent upon receiving regulatory permission. In a similar vein, BlackRock has echoed this stance, highlighting the possibilities of in-kind transactions, but this is reliant upon receiving approval from regulatory authorities.

Because of the SEC’s insistence on a “cash-only” strategy, authorized participants in these exchange-traded funds (ETFs) are now required to supply cash in order to purchase more shares. Unlike the “in-kind” technique, which allows investors to directly swap the asset that the ETF monitors (in this instance, Bitcoin) for ETF shares, this approach takes a different approach. The cash-only strategy seeks to provide better transparency on the sources of the Bitcoin that serves as the basis for the exchange-traded fund (ETF), which would presumably acquire the Bitcoin from reputable exchanges.

The reaction from the industry has been inconsistent. Eric Balchunas, an analyst for Bloomberg ETFs, adds that ARK and its partner 21Shares first rejected the cash generation approach. In fact, they even came up with an alternate mechanism for in-kind redemptions. Their final compliance is an indication of the SEC’s tough attitude on the subject, and the analyst suggests that this might pave the way for the possibility of an approval of a Bitcoin exchange-traded fund (ETF) as early as January.

This new move is a part of a larger trend in which entities that issue exchange-traded funds (ETFs), such as WisdomTree, a worldwide supplier of ETFs, have been required to conform to the SEC’s preference for cash redemptions. This strategy move among large firms such as BlackRock and ARK Invest represents a substantial adaptation to regulatory restrictions, and it may signal the beginning of a new phase in the development of Bitcoin exchange-traded funds by bringing about a new phase.

SEC in Advanced Talks with Asset Managers for Spot Bitcoin ETF: BlackRock in the Spotlight

The launch of a spot Bitcoin exchange-traded fund (ETF) is a topic of active debate between the U.S. Securities and Exchange Commission (SEC) and a number of asset managers, notably the massive investment firm BlackRock. This action may be a crucial turning point in the acceptance of cryptocurrencies in traditional financial markets.

Chair Gary Gensler’s office representatives attended a recent round of discussions conducted by the SEC with asset managers who were considering the creation of a spot Bitcoin ETF in the United States. Representatives from BlackRock met with the SEC on December 14th to discuss a proposed rule change that would permit trading of the cryptocurrency investment vehicle on major exchanges. According to reports, BlackRock and the SEC are meeting for the third time to discuss the ETF application.

In recent weeks, asset managers and the SEC have had more intense talks. In addition to BlackRock, the SEC has spoken with representatives from Grayscale, Franklin Templeton, and Fidelity, among other significant companies. A variety of issues have been discussed in these talks, such as investor protection and market manipulation. However, special attention has been paid to the processes involved in creating currency, redeeming it, and obtaining spot Bitcoin from actual exchanges.

In the financial community, the approval of a spot Bitcoin ETF is much awaited. Several major asset managers, including Grayscale, Fidelity, Invesco, and WisdomTree, want to introduce their spot Bitcoin exchange-traded funds (ETFs). The ability to trade Bitcoin on Wall Street’s key exchanges would enable the cryptocurrency to reach a wider range of investors and greatly increase its credibility and acceptability in traditional finance, should the SEC approve these ETFs. However, there is a feeling of uncertainty over the result since the SEC’s approach to these products has been characterized by delays and denials in the past.

Differentiating between a spot and a futures Bitcoin exchange-traded fund (ETF) is crucial. A spot ETF holds actual Bitcoin at the current price, indicating its real-time tracking of the price. As opposed to owning the cryptocurrency itself, a futures exchange-traded fund (ETF) makes investments in Bitcoin futures contracts, gambling on the price of Bitcoin in the future. In 2021, the SEC authorized the first Bitcoin ETF with futures.

The interaction between BlackRock and the SEC has been very significant. BlackRock offered two possible redemption scenarios for its iShares Bitcoin Trust in an SEC memo: one that included in-kind transactions and the other that used cash. This demonstrates BlackRock’s dedication to negotiating the regulatory environment and providing a workable Bitcoin ETF solution.

There is growing conjecture that the SEC is getting closer to deciding whether to approve a spot Bitcoin exchange-traded fund. Given its potential to have a major influence on the market, investors and the cryptocurrency sector are eagerly watching the results of these discussions. The fact that Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, and Bitwise are among the other noteworthy candidates for spot crypto ETFs demonstrates the broad interest in this financial product.

The continuing debate for a spot Bitcoin ETF between the SEC and big asset managers like BlackRock is a significant turning point in the development of cryptocurrencies as a mainstream commodity. The SEC’s ruling, which is anticipated soon, has the potential to change the bitcoin investment environment and provide new opportunities for investor involvement in the digital asset market.