BlackRock intends to allocate $10 million to a seed fund dedicated to its forthcoming spot Bitcoin exchange-traded fund (ETF). This monetary pledge is a strategic move as the company readies itself for the anticipated launch of the ETF, contingent upon regulatory clearance from the Securities and Exchange Commission (SEC).
As outlined by James Seyffart, an ETF analyst at Bloomberg Intelligence, BlackRock, the world’s largest asset manager, has recently updated its S-1 filing with the SEC for the Bitcoin ETF. The revised filing provides insights into BlackRock’s actions leading up to the potential approval of the Bitcoin ETF, outlining its plan to invest $10 million in a designated seed fund.
BlackRock Advances With Seed Fund
“On January 3, 2024, the Seed Shares were converted into cash, and the Seed Capitol Investor acquired the Seed Creation Baskets, comprising 400,000 Shares at a pre-share price of $25.00,” as detailed in the filing.
The filing further stated, “Total proceeds to the Trust from the sale of the Seed Creation Baskets were $10,000,000.” It continued, “The Trust purchased [ ] bitcoin at the price of $[ ] per bitcoin with the proceeds of the Seed Creation Basket on January 3, 2024.”
While Seyffart clarified that the seed movements “do not signify a launch,” BlackRock’s outlined plan for the Bitcoin ETF’s seed round aligns with their January approval prediction.
It was emphasized that, despite not being officially named, Authorized Participants would exclusively handle cash and not engage directly with Bitcoin.
“The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares,” as highlighted in a post by Bloomberg analyst Eric Balchunas. He added, “Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive bitcoin as part of the creation or redemption process.”
Bitcoin ETF Could “Completely Destroy” Bitcoin: Arthur Hayes
While prominent financial entities such as BlackRock, Fidelity, and Grayscale actively refine their Bitcoin ETF proposals, Arthur Hayes, co-founder and former CEO of BitMEX, has expressed substantial concerns about the potential ramifications in a recent blog post.
Hayes envisions a future scenario where major Western and Chinese asset managers amass the entirety of circulating Bitcoin. He warns, “Now that a handful of firms hold all the Bitcoin, and have no actual use for the Bitcoin blockchain, the coins never move again.”
He goes on to highlight a potential shift where people opt for Bitcoin ETF derivatives rather than directly holding Bitcoin in self-custodied wallets. Hayes suggests, “The end result is miners turn off their machines as they can no longer pay for the energy required to run them. Bye-bye, Bitcoin!”
In his conclusion, Hayes asserts that if traditional financial institutions’ spot Bitcoin ETFs become “too successful,” they could spell the complete destruction of Bitcoin.
