Blackrock's Bitcoin ETF

BlackRock's Bitcoin ETF

By Hanna Tariku, Archie Fisher, Finlay Luke, Syed Hussayn Aleem, Yean-Xin Lim, Hui Wen Chong

Contents

Introduction

Methods of mitigating threats

Who is BlackRock?

Conclusion

What is BlackRock's Bitcoin ETF?

References

Strategic Opportunities

Threats

02

Who is Blackrock?

Who is blackrock?

• American multinational investment company
• Investment, advisory, risk management solution
• Purpose: Help people experience financial well-being (BlackRock, n.d.)
• Contributing to a more equitable and resilient world
• Leading Provider of Financial Technology
• World's largest asset manager
• Oversees $9.4 trillion in assets (Ungarion, 2023)
• BlackRock is a majority investor in almost every major publicly traded company
• Profits from companies' operations & as major shareholder
• Aims to promote sustainability & low carbon transition (BlackRock, n.d.)
• Customers: financial advisors, insurance companies, etc.

03

What are bitcoin ETFS?what is blackrock's bitcoin etf?

What is BlackRock's ETF?

What are Bitcoin ETFs?

Firstly, Forbes (2023) identifies how the SEC currently has only accepted Bitcoin ETFs that track futures contracts, with indirect exposure to the cryptocurrency. Investopedia (2023) details how BlackRock and others aim to gain approval for an ETF that directly invests in the cryptocurrency. CF Benchmarks (2023) illustrates that BlackRock’s ETF aims to do this through tracking the current price of Bitcoin using the CME CF Bitcoin Reference Rate and Coinbase's custodian services to achieve this. These, daily spot prices reflect the cryptocurrencies performance in financial markets. The spot Bitcoin ETF is a product distinct from current competition in the market.

The term ETF stands for Exchange-Traded Funds​ Singh (2023) explains a Bitcoin ETF is a financial asset which allows investors to gain exposure to Bitcoin's price fluctuations without investing into the cryptocurrency. The investor does not need to own a digital wallet or forgo cryptocurrency exchanges

04

Strategic Opportunities

Strategic opportunities

Business

Individual

Government

Market competitiveness Potential for increased tax revenues Foreign Investment

Provides access to new demographic groups Crypto furnishes certain options that are simply not available with fiat currency Help spur internal awareness in companies about this technology

Reduced complexity for individual investors More investment opportunities Better than future-based ETFs

05

Threats

Threats to ...

Government

Business

Individuals

Market Disruption

Volaitility

Regulatory Challenges

Regulators must navigate concerns regarding: - fraud - investor protection - market manipulation - systemic risk

Existing crypto firms may not be able to compete with major asset management firms like BlackRock

Market volatility of bitcoin can lead to large investor losses

Volatility Exposure

No Direct Ownership

Companies that hold cryptocurrency assets are exposed to market fluctuations that could lead to financial distress

Lack of ownership means investors don't have direct access or control over their Bitcoin. This also results in no anonymity and higher ETF fees.

06

Methods of mitigating threats

methods of mitigating risks

Develop effective market oversight

Diversify your porfolio

Educate yourself

Achieve regulatory clarity

Understand associated risks (e.g. volatility and costs)

Understand potential disruption impacts (Jacobi Asset Managment, 2023)

Avoid overexposure to Bitcoin ETF Spread risk

Essential for market stability Surveillance-sharing agreement

07

Conclusion

Conclusions

WHAT HAVE WE COVERED

• Bitcoin ETF Proposal: BlackRock's spot Bitcoin ETF could enhance cryptocurrency adoption and liquidity

• ETFs vs. Trusts: Highlighted differences, emphasizing BlackRock's innovative approach.

• Opportunities Presented:

• Individuals: Easier, potentially cheaper Bitcoin investment.
• Businesses: Access to blockchain technology and new customer segments.
• Governments: Economic growth and increased tax revenue through crypto-friendly policies.
• Potential Risks: Market volatility and the necessity for comprehensive regulatory oversight.
• Bitcoin's Future with ETFs: BlackRock's involvement signifies a major shift, possibly leading to more institutional adoption and market stability.
• Regulatory Landscape: Growing pressure and risk mitigation pointing towards likely SEC approval of Bitcoin ETFs.

References

BlackRock. (n.d.). About BlackRock - What We Do, Who We Are & Our Purpose. BlackRock. Retrieved November 17, 2023, from https://www.blackrock.com/corporate/about-us BlackRock. (n.d.). Sustainable & transition investing with BlackRock. BlackRock. Retrieved November 17, 2023, from https://www.blackrock.com/uk/solutions/sustainable-and-transition-investing/how-to CF Benchmarks. (n.d.). BlackRock’s CFB-powered Bitcoin ETF filing is a vote of confidence. Retrieved November 27, 2023, from https://www.cfbenchmarks.com/blog/blackrocks-cfb-powered-bitcoin-etf-filing-is-a-vote-of-confidence-2 Deloitte. (2022). The Business Benefit of Using Cryptocurrency. Retrieved November 18, 2023, from https://www2.deloitte.com/us/en/pages/audit/articles/corporates-using-crypto.html Jacobi Asset Management. (2023, September 11). Bitcoin ETFs on the Horizon. Retrieved November 20, 2023, from https://jacobiam.com/resources/bitcoin-etfs-on-the-horizon/ Kamsky, A. (2023, August 3). BlackRock Bitcoin ETF: How it works, benefits and drawbacks. Retrieved November 20, 2023, from https://www.ccn.com/education/blackrock-bitcoin-etf-explainer/

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References

Katzeff, P. (2023, June 30). BlackRock’s Bitcoin ETF: What You Need To Know. Retrieved November 19, 2023, from https://www.forbes.com/advisor/investing/cryptocurrency/spot-bitcoin-etf/ Parkin, D. (2023, October 17). Fake news on BlackRock ETF drives up both the price of Bitcoin and the demand for accurate reporting. Retrieved November 20, 2023, from https://www.msn.com/en-gb/money/other/fake-news-on-blackrock-etf-drives-up-both-the-price-of-bitcoin-and-the-demand-for-accurate-reporting/ar-AA1ilePc Reiff, N. (n.d.). How Do Cryptocurrency Exchange-Traded Funds (ETFs) Work?. Retrieved November 24, 2023, from https://www.investopedia.com/investing/understanding-cryptocurrency-etfs/#toc-the-disadvantages-of-crypto-etfs Statista. (2023, September 14). BlackRock: assets under management 2021. Retrieved November 20, 2023, from https://www.statista.com/statistics/891292/assets-under-management-blackrock/‌ Singh, J. (n.d.). BlackRock’s Bitcoin ETF: How it works, its benefits and opportunities. Retrieved November 27, 2023, from https://cointelegraph.com/learn/blackrocks-bitcoin-etf UK Parliament. (2018, April). Written evidence submitted by CryptoUK (DGC0031). Retrieved November 18, 2023, from https://committees.parliament.uk/writtenevidence/89451/html/ Ungarino, R. (2023, September 3). BlackRock is wrestling with succession planning. Here's the latest news on the biggest money manager. Business Insider. Retrieved November 17, 2023, from https://www.businessinsider.com/blackrock-news-updates?r=US&IR=T#:~:text=BlackRock%20oversees%20%249.4%20trillion%20in,executive%20and%20cofounder%2C%20Larry%20Fink

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THANK YOU

Hanna Tariku, Archie Fisher, Finlay Luke, Syed Hussayn Aleem, Yean-Xin Lim, Hui Wen Chong

BlackRock's Bitcoin ETF