BlackRock, the world's largest asset manager, appears to be nearing launch of a new kind of Bitcoin ETF, one designed to pay investors income, not just track the price of the cryptocurrency.
BlackRock, the world's largest asset manager, appears to be nearing launch of a new kind of Bitcoin ETF, one designed to pay investors income, not just track the price of the cryptocurrency.
The asset manager filed a Form 8-A with the Securities and Exchange Commission on June 11 to register its iShares Bitcoin Premium Income ETF for listing on Nasdaq under the ticker BITA.
Bloomberg senior ETF analyst Eric Balchunas said the filing typically signals a launch within one week, putting his best estimate at June 19.
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The fund combines two components: Bitcoin price exposure and income generation. The fund gains exposure to Bitcoin through holdings that include Bitcoin and shares of BlackRock's iShares Bitcoin Trust (IBIT), while generating income by selling call options. The premiums collected from selling those options help generate income for investors.
In simple terms, a call option gives the buyer the right to buy an asset at a predetermined price within a specific date. The fund sells those contracts, collects the fees, and passes them on to investors.
The trade-off is straightforward, if Bitcoin's price surges sharply, BITA investors miss out on some of those gains because the fund has already agreed to sell at a lower price.
With a planned fee of 0.65%, the fund is cheaper than competing covered-call Bitcoin ETFs.
BlackRock is not alone. Goldman Sachs filed for its own competing Bitcoin Premium Income ETF in April.
As per Balchunas, the American bank is expected to launch around July 1, setting up a direct race between two of Wall Street's largest names for the same investor base.
This is not BlackRock's first move in this direction. The firm first filed an S-1 for the product in January, signaling its intent to bring yield-bearing Bitcoin exposure to mainstream investors.
With the latest SEC filing, BlackRock moves another step closer to launching the ETF.
