In October 2023, BlackRock, the largest asset management firm globally, received a $100,000 seed investment for its spot Bitcoin ETF, as revealed in a recent United States Securities and Exchange Commission (SEC) filing. The filing detailed that an investor purchased 4,000 shares at $25.00 per share on October 27, 2023, acting as a statutory underwriter for the Seed Creation Baskets.
The filing also provided insights into BlackRock’s strategy for managing the sponsor’s fee. The firm plans to utilize short-term Bitcoin or cash loans from a trade credit lender, enabling it to levy fees through these loans while minimizing the impact on Bitcoin’s market price.
Trade credit settlements are due the business day following the transaction and will include a financing fee. This fee is calculated as 11% plus the federal funds target rate, divided by 365. For example, if the federal funds target rate was 5.50% on November 20, 2023, the financing fee would be based on this rate plus 11%, divided by 365, on the borrowed sum.
BlackRock, a leader in the financial industry, submitted its application for a spot Bitcoin ETF in July and is one of 13 candidates awaiting a decision from the SEC. Despite past rejections of similar applications, industry experts predict that the first spot Bitcoin ETF in the U.S. could be approved by early 2024.
