ETF capture of asset classes expanded notably last week with the launch of 10 spot bitcoin ETFs. Todd Rosenbluth, head of research at VettaFi, discussed the launch of the iShares Bitcoin Trust (IBIT), with BlackRock’s Jay Jacobs. Rosenbluth and Jacobs also talked about the benefits of ETF bitcoin exposure for investors, and about blockchain technology at the Crypto Symposium hosted on the VettaFi platform.
“This is a culmination of a multiyear journey to bring out a bitcoin ETF,” Jay Jacobs, U.S. head of thematics and Active Equity ETFs at BlackRock, explained. “This was really driven by the investors themselves.”
Threefold Benefit of Spot Bitcoin ETFs for Investors
ETFs remain a popular vehicle with investors. Demand continues to grow for more asset classes offered in an ETF wrapper. The approval by the SEC and subsequent launch of spot bitcoin ETFs provide investors with a number of benefits.
The iShares Bitcoin Trust (IBIT) allows investors to gain access to bitcoin through their traditional brokerages. “The ability to see bitcoin alongside traditional investments like stocks and bonds is a key piece of why an ETF provides value to investors,” said Jacobs.
As well as ease of access, spot bitcoin ETFs provide convenience for investors. Cryptocurrency is an asset class that requires custodians, storage, and additional tax considerations when invested in directly. An ETF helps remove much of the legwork and complexities from bitcoin investing.
“For us, it’s really about quality,” Jacobs explained of the launch of IBIT. “It’s about looking at what BlackRock has done across 1,300 ETFs globally and trillions of dollars in assets over the last 20 years and really applying that quality to a bitcoin ETF.”
He went on to discuss the increased need for granularity by investors in an environment of ongoing risk and uncertainty. The addition of bitcoin ETFs gives investors even more choice, particularly when increasingly more portfolios look beyond traditional asset classes.
Opportunity to Invest in Blockchain’s Nascent Potential
BlackRock also offers the iShares Blockchain and Tech (IBLC) that launched in April 2022. Blockchain is a decentralized ledger maintained in a peer-to-peer network.
“Historically, a lot of data entry has been centralized and when it is centralized, that means it is controlled by one or only a few people,” Jacobs said. “That can be really powerful for doing things quickly. But that’s not necessarily very powerful for doing things in a secure way, or an immutable way.”
Because blockchain is decentralized, it provides security and an immutability that centralized systems cannot. Jacobs still considers blockchain technology to be in the nascent stage of development, but with much promise. As increasingly more companies begin to adopt the technology, and its use case is better defined, broad uptake will likely follow.
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