19Jun 2023

BlackRock BTC ETF & Grayscale GBTC

by Matthew Harcourt

BlackRock Applies for Bitcoin Exchange-Traded Fund


Last week, BlackRock, the world’s largest asset manager with over US$9 trillion in assets, submitted a preliminary prospectus for an iShares Bitcoin Trust. The Exchange-Traded Fund (ETF) will invest in Bitcoin that would be held in custody by Coinbase, the largest U.S. crypto exchange. The excitement over this news has also been met with scepticism, as the United States Securities & Exchange Commission (SEC) have repeatedly rejected attempts to register a Bitcoin spot ETF since as early as 2013. Despite this, BlackRock is undeniably the largest and most prestigious institution to have filed for a Bitcoin ETF thus far.      

The main argument the SEC has used to reject previous ETF filings is that Bitcoin spot markets are unregulated, remain too opaque, and are susceptible to fraud and manipulation. Whether this view has changed since Van Eck’s rejected filing in March this year is yet to be determined. Adding to the headwinds facing the filing, the ETF’s custody provider, Coinbase, has recently been sued by the SEC for being an unregistered securities exchange. However, BlackRock’s application is the best chance for finally seeing a much anticipated Bitcoin ETF. If approved, this would be a significant positive event for the crypto asset market.

Grayscale Bitcoin Trust


Grayscale is very familiar with the challenges facing managers of Bitcoin and other crypto asset related funds. The Grayscale Bitcoin Trust (GBTC) is a non-redeemable spot Bitcoin trust that has an Assets Under Management of over US$16 billion. GBTC can be traded in Over-The-Counter (OTC) markets and currently trades at a discount of 36.6% to Net Asset Value (NAV). Grayscale has attempted to convert GBTC into an ETF multiple times, with each attempt being rejected by the SEC. 

Grayscale has sued the SEC over its refusal to allow GBTC to be converted into an ETF, stating that the SEC’s stance that Bitcoin spot prices are subject to manipulation but futures are not is illogical, since the latter reflect the former. After the news of BlackRock’s filing broke, the discount on GBTC decreased from -43.8% to -36.6%, indicating that investors are speculating on the potential follow on effects of a successful BlackRock filing.  

Matthew Harcourt

Matthew has been actively investing in the crypto markets for 7 years and holds a Bachelor of Business from Monash University, majoring in Accounting. Matthew focuses on portfolio construction through thorough research and analysis of crypto protocols as well as execution of investments and strategies. Matthew’s passion lies in supporting portfolio companies through advisory on tokenomics and strategy, adding significant value to Apollo’s early-stage investments.