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BlackRock to Invest $10 Million in Seed Fund for Proposed Bitcoin ETF

Financial services giant BlackRock plans to invest $10 million into a seed fund for its proposed spot Bitcoin exchange-traded fund (ETF). The investment is contingent on regulatory approval from the Securities and Exchange Commission (SEC).

Details of the planned Bitcoin ETF

According to Bloomberg Intelligence ETF analyst James Seyffart via a tweet BlackRock’s updated S-1 filing with the SEC details preparations for the Bitcoin ETF, including the seed fund investment. The seed fund intends to purchase Bitcoin on January 3, 2024, at an unspecified price.

While seeding the ETF does align with predictions of a possible January SEC approval, it does not guarantee the fund’s ultimate launch. Authorized Participants involved with the ETF will only handle cash transactions, not directly deal with Bitcoin for creating or redeeming shares.

Potential concerns surrounding ETFs holding Bitcoin

Arthur Hayes, co-founder and former CEO of BitMEX, voiced concerns in his article “Too Many HODLers of Last Resort” that large asset managers holding Bitcoin through ETFs could harm the cryptocurrency. Hayes suggests that traditional financial institutions’ Bitcoin ETFs, if too successful, could lead to a situation where the Bitcoin blockchain becomes stagnant, miners may shut down due to profitability issues, ultimately destroying Bitcoin.

For now, the anticipated spot Bitcoin ETF by BlackRock and similar products still face regulatory scrutiny and have not launched as of October 2021 according to tweets by Seyffart and ETF analyst Eric Balchunas.

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