Bitcoin Takes Center Stage: WisdomTree & BlackRock Spark ETF Frenzy

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June 21, 2023 by Ammar Raza

WisdomTree, a prominent provider of exchange-traded funds (ETFs), has taken a significant step towards embracing the world of cryptocurrencies. The company has filed an application seeking approval to launch the WisdomTree Bitcoin Trust, an ETF that will be listed on the Cboe BZX Exchange.

This move follows closely on the heels of BlackRock’s recent application for a spot bitcoin ETF, indicating a growing interest and recognition of bitcoin within the traditional finance sector.

Bitcoin Trust Structure & Custodial Arrangements

The WisdomTree Bitcoin Trust, as outlined in the application document, will be an exchange-traded fund that issues common shares of beneficial interest. These shares, trading under the ticker symbol “BTCW,” will be listed on the Cboe BZX Exchange.

The Trust will hold BTC as its primary asset and will value its shares daily based on the C.F. Bitcoin U.S. Settlement Price, which is determined by aggregating trade flow data from major BTC spot exchanges.

One notable aspect of the Trust’s operations is its intention to conduct “in-kind” transactions with Authorized Participants.

These financial firms, authorized to purchase or redeem shares with the Trust, will deliver or facilitate the delivery of BTC to the Trust’s custodian, U.S. Bank, National Association. This method allows for the seamless exchange of BTC for shares and vice versa.

While the Trust’s investment objective is to gain exposure to the price of BTC, it also aims to comply with specific requirements to provide investors with protections similar to those offered by the Investment Company Act of 1940.

The Trust will custody its assets at a bank meeting the Act’s requirements, provide daily disclosures of portfolio holdings and net asset value, and undergo annual audits by an independent registered public accounting firm.

The filing of both WisdomTree and BlackRock for spot Bitcoin ETFs underscores the increasing recognition of BTC’s potential in traditional finance.

Despite previous rejections of spot ETF applications by the Securities and Exchange Commission (SEC), the approval of Bitcoin futures ETFs has opened doors for further exploration of regulated investment vehicles in the BTC market.

These filings may mark a significant turning point, potentially attracting a new wave of institutional investors to the cryptocurrency space. However, with the potential approval of these spot Bitcoin ETFs, broader adoption and increased institutional participation in the market may soon follow.

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