BlackRock's Bitcoin ETF Surpasses $2B Mark Amid SEC Concerns

By: Eva Baxter

Assets under-management (AUM) for BlackRock iShares Bitcoin ETF (IBIT) have crossed the $2 billion mark, leading the recently launched bitcoin-based investment products. This success comes despite the company's reservations regarding the SEC's approval of the cash-creation mechanism rather than in-kind orders for the ETF shares, which they argue could potentially disadvantage investors.

BlackRock's IBIT was in stark contrast with Grayscale GBTC, which continued a consistent outflow trend. BlackRock along with Fidelity led bitcoin accumulation, surpassing the $2 billion and $1.83 billion inflow marks respectively, while Grayscale reported outflows. This trend underscores the strong performance of these two players against the landscape of crypto ETFs. However, BlackRock has expressed concerns that the use of cash creations and redemptions might cause delays in transactions, potentially affecting the price of Shares.

A significant part of BlackRock's concern relates to efficiency. BlackRock has highlighted that cash-creation commodity-shares ETFs are 'a novel product' that hasn't been tested and could be materially affected during times of market volatility or turmoil. It points out the risks of reduced arbitrage opportunities for Authorized Participants and advises caution that a mismatch might occur because cash transactions are more complex than direct Bitcoin transactions. However, any change to enable in-kind orders will be possible only after exchange regulatory approval.