{"id":23964,"date":"2023-06-17T12:26:59","date_gmt":"2023-06-17T16:26:59","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/experts-highlight-key-distinctions-between-bitcoin-trusts\/"},"modified":"2023-06-17T12:27:00","modified_gmt":"2023-06-17T16:27:00","slug":"experts-highlight-key-distinctions-between-bitcoin-trusts","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=23964","title":{"rendered":"Experts Highlight Key Distinctions Between Bitcoin Trusts"},"content":{"rendered":"
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BlackRock<\/strong>\u00a0has recently\u00a0filed an application for a spot Bitcoin ETF\u00a0with the Securities and Exchange Commission.<\/p>\n

While some might think that the investment giant is applying for an ETF or a trust with properties similar to the\u00a0Grayscale Bitcoin Trust (GBTC), there are certain distinctions between the two products.\u00a0<\/p>\n

For one, BlackRock’s iShares product, which is technically a trust, allows redemptions similar to an ETF. In contrast, the GBTC lacks this function,\u00a0according to Noelle Acheson, editor of Crypto is Macro Now.\u00a0<\/p>\n

“The market hears \u2018trust\u2019 and thinks it will be like GBTC with no redemptions, but that’s not the case here,” he added.\u00a0<\/p>\n

The key difference between a\u00a0bitcoin (BTC)<\/strong>\u00a0ETF and a trust lies in the ability to buy bitcoin at the end of the trading day to bring the fund’s assets in line with its trading price, which only an ETF can do.\u00a0<\/p>\n

A trust, on the other hand, is a fixed portfolio with no ability to adjust its holdings and therefore often trades at a varying premium or discount to its underlying assets\u2019 value.\u00a0<\/p>\n

For instance, GBTC has been trading at around a 40% discount to net asset value for years, prompting Grayscale to seek SEC approval for a Bitcoin ETF.\u00a0<\/p>\n

The company has even filed a lawsuit after the SEC rejected the conversion, which is currently playing out in a Washington DC court with a final decision expected\u00a0later this year<\/u>.\u00a0<\/p>\n

Grayscale has argued that the spot price of bitcoin in both spot and futures ETFs is subject to the same risks, so it does not make sense to approve one product and not the other.<\/p>\n

The SEC has\u00a0said<\/u>\u00a0that its disapproval of Grayscale\u2019s spot ETF \u201cwas reasonable, reasonably explained, supported by substantial evidence, and faithful to the text of the Exchange Act.\u201d<\/p>\n

BlackRock’s ETF Adheres to Highest Possible Standards.\u00a0<\/h2>\n

BlackRock has revealed that the pricing for its spot bitcoin fund will be calculated daily based on the CF CME Bitcoin Reference Rate, which “aggregates the notional value of Bitcoin trading across major Bitcoin spot exchanges.”<\/p>\n

This would allow that investment firm to reliably track the spot price of Bitcoin, allaying some of the SEC\u2019s concerns.<\/p>\n

BlackRock’s iShares Bitcoin Trust will use\u00a0Coinbase<\/strong>\u00a0Custody<\/strong>\u00a0as its custodian. The new iShares Bitcoin Trust will be listed on the\u00a0Nasdaq<\/strong>\u00a0exchange.<\/p>\n

It is worth noting that since BlackRock is the world\u2019s largest money manager, with\u00a0$9.1 trillion of assets under management\u00a0at the end of the first quarter of the year, the SEC won’t be able to easily reject its application.<\/p>\n

“Given their reputation, this has the highest likelihood of happening out of all the attempts at a spot ETF so far,” crypto market analyst Joe Consorti said in a recent tweet.\u00a0<\/p>\n

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