blackrock

No, BlackRock Won’t Ossify Bitcoin

Published

4 months ago

November 16, 2024

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In his Take from Wednesday, Shinobi argued that the surge of institutional bitcoin adoption will lead to premature ossification of the Bitcoin protocol. While I share his concern to an extent, I am less convinced this is necessarily true.

Bitcoin is inherently a permissionsless system. For protocol changes specifically, it “just” requires users to upgrade their software. And when it comes to deploying soft forks, it really only needs a majority of miners to upgrade. (This is admittedly a simplification for the sake of brevity, but I’d say it’s still “true enough” to state it this way.)

Miners will for the most part follow economic incentives. If a protocol upgrade makes Bitcoin (say) more scalable or more private, there is actually good reason to think this would make Bitcoin more valuable, which in turn means there is good reason to think miners will activate the upgrade.

Even in an extreme scenario where a soft fork occurs through a user activated soft fork (UASF) that splits the blockchain, and even if in this scenario the institutions prefer the legacy version of the chain (this is the scenario Shinobi is ultimately envisioning), it’s not obvious to me that the non-upgraded chain would “win”.

Just owning lots of bitcoin does not give you a “say” on which side of a chain split is more valuable. Initially, everyone receives coins on both sides. Only if you’re willing to buy or sell these coins (eg.: “dump” coins on one side of the split to get more coins on the other side) does your economic weight matter. But this means you have to take a risk: skin in the game.

Would big institutions really be willing to bet everything they own on the version of the protocol without the upgrade? That’s a big assumption to make.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Bitcoin spot ETF

BlackRock to allocate up to 2% of model portfolio to IBIT Bitcoin ETF

Published

3 weeks ago

February 28, 2025

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BlackRock, the world’s largest asset manager with over $10 trillion in assets under management, is incorporating Bitcoin into its own model portfolio.

According to a Bloomberg report on Feb. 28, the asset manager will allocate 1% to 2% of its Bitcoin (BTC) exchange-traded fund to target model investment portfolios. These allocations, sourced from the BlackRock iShares Bitcoin Trust ETF under the ticker IBIT, will be directed toward the company’s portfolios that include alternative investments.

In the investment world, model portfolios are pre-structured funds designed to offer ready-made strategies. They provide managed investment strategies that invest in fund shares and are marketed to financial advisors.

Model portfolios have seen significant growth across the market, driven in part by rising interest in digital assets and crypto exchange-traded products.

BlackRock’s IBIT is currently a $48 billion spot Bitcoin ETF, holding 576,046 bitcoins, which accounts for about 2.9% of the total Bitcoin market share. According to Bloomberg, BlackRock plans to allocate 1% to 2% of IBIT into its $150 billion model portfolio.

Although this $150 billion pool represents a small portion of BlackRock’s overall model portfolio business, the inclusion of IBIT could significantly boost demand for the spot Bitcoin ETF.

Michael Gates, lead portfolio manager for target allocation ETF models at BlackRock, reiterated the company’s confidence in Bitcoin as an investment.

“We believe Bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios,” Gates said in a note to investors on Feb. 27.

The U.S. Securities and Exchange Commission approved IBIT and several other spot Bitcoin ETFs in January 2024. BlackRock, Fidelity Investments, WisdomTree, and VanEck were among the firms that received regulatory approval for the listing and trading of Bitcoin ETFs.

Investor demand for these funds helped push Bitcoin’s price above $69,000 in March 2024. Later, heightened interest amid the U.S. election cycle propelled Bitcoin to an all-time high above $109,000.

However, a sell-off has since driven BTC down to $79,000, with significant outflows from spot ETFs, including IBIT, in the past week.

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barclays

Banking Giant Barclays Owns $136,834,631 Worth of BlackRock’s Bitcoin Exchange-Traded Fund

Published

1 month ago

February 15, 2025

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The multinational banking giant Barclays holds nearly $137 million worth of BlackRock’s iShares Bitcoin exchange-traded fund (ETF).

The London-headquartered bank disclosed it holds 2,473,064 shares of BlackRock’s IBIT fund in a recent quarterly filing submitted to the U.S. Securities and Exchange Commission (SEC).

IBIT, the largest Bitcoin (BTC) ETF in terms of assets under management (AUM), is priced at $55.33 at time of writing, meaning Barclays’ holdings are worth around $136.8 million.

Barclays also recently disclosed in a 2024 annual report that the United Kingdom’s Financial Conduct Authority (FCA) is probing the bank over potential anti-money laundering rule violations.

Explains the firm,

“The FCA’s investigation focuses primarily on the historical oversight and management of certain customers with heightened risk. Barclays has been cooperating with the investigation.”

Barclays has shown an interest in the blockchain and digital asset space for years. In 2024, the bank teamed up with other financial institutions and the industry body UK Finance to participate in a tokenized deposits pilot project.

And back in 2022, reports emerged that Barclays planned to buy a multimillion-dollar stake in Copper, a European crypto firm aiming to provide a secure infrastructure for institutions looking to invest in digital assets. That same year, the bank also backed Elwood Technologies, a crypto infrastructure and market data platform founded by billionaire Alan Howard.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Bitcoin

Nasdaq Proposes In-Kind Redemptions for BlackRock’s Bitcoin ETF

Published

1 month ago

February 10, 2025

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Nasdaq has submitted a groundbreaking proposal to the U.S. Securities and Exchange Commission (SEC) that could transform the operational framework of Bitcoin exchange-traded funds (ETFs). The proposal, focused on BlackRock’s iShares Bitcoin Trust (IBIT), seeks to introduce “in-kind” bitcoin redemptions, offering a streamlined and cost-effective alternative to the current cash redemption process.

JUST IN: BlackRock files to allow in-kind creations and redemptions for its spot Bitcoin ETF! pic.twitter.com/SSigX4utRG
— Bitcoin Magazine (@BitcoinMagazine) January 24, 2025

What Are In-Kind Redemptions?

Under the proposed system, institutional players known as authorized participants (APs) – responsible for creating and redeeming ETF shares – could opt to exchange ETF shares directly for bitcoin rather than cash. This innovation eliminates the need to sell bitcoin to generate cash for redemptions, simplifying the process while cutting operational costs.

While this option would only be available to institutional participants and not retail investors, experts suggest that the improved efficiency could indirectly benefit everyday investors. By reducing operational hurdles, in-kind redemptions have the potential to make Bitcoin ETFs more streamlined and cost-efficient for all market participants.

Why the Change?

The cash redemption model, implemented in January 2024 when spot Bitcoin ETFs were first approved by the SEC, was designed to keep financial institutions and brokers from handling bitcoin directly. This approach prioritized regulatory simplicity during the nascent stages of Bitcoin ETFs.

However, the rapid growth of the Bitcoin ETF market has created new opportunities to improve its infrastructure. With evolving regulations and a more mature digital asset ecosystem, Nasdaq and BlackRock now see a pathway to adopt a more efficient in-kind redemption model.

Benefits of In-Kind Redemptions

Operational Efficiency:
- Reduces the complexity and number of steps in the redemption process.
- Streamlines ETF operations, saving both time and costs.
Tax Advantages:
- Avoiding the sale of bitcoin minimizes capital gains distributions, making ETFs more tax-efficient for institutional investors.
Market Stability:
- Reduces sell pressure on bitcoin during redemptions, potentially stabilizing the asset’s price.

Regulatory and Market Context

Nasdaq’s proposal coincides with significant regulatory developments under the pro-Bitcoin Trump administration. Recent policy shifts, such as the repeal of Staff Accounting Bulletin 121 (SAB 121), have paved the way for broader cryptocurrency adoption. The removal of SAB 121 eliminated barriers that previously discouraged banks from offering cryptocurrency custody services, creating a more favorable environment for innovations like Nasdaq’s in-kind redemption model.

BlackRock’s Bitcoin ETF: A Market Leader

Since its 2024 launch, BlackRock’s iShares Bitcoin ETF has emerged as a market leader, with over $60 billion in inflows. The fund’s consistent growth highlights institutional demand for Bitcoin investment products. Innovations like Nasdaq’s in-kind redemption model could further enhance IBIT’s appeal to institutional investors.

BlackRock’s IBIT Inflows Since Launch. Source: Bitcoin Magazine Pro. View *Live Chart*

Note the consistent upward trend of green candles, reflecting strong and steady inflows.

Conclusion

Nasdaq’s proposal to introduce in-kind redemptions for BlackRock’s Bitcoin ETF represents a pivotal moment for the Bitcoin ETF market. By simplifying redemption processes, offering tax efficiencies, and reducing sell pressure on bitcoin, the model stands to significantly enhance the appeal and performance of Bitcoin ETFs for institutional investors.

As the Bitcoin ETF market matures and regulatory support continues to grow, innovations like this are poised to drive further adoption. If approved, Nasdaq’s proposal could mark a critical step forward, solidifying Bitcoin ETFs as a cornerstone of institutional digital asset investment while indirectly benefiting retail participants.

With a favorable regulatory climate and growing institutional interest, the future of Bitcoin ETFs looks brighter than ever.

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