BlackRock Files for New Bitcoin ETF That Generates Monthly Income

TLDR

• BlackRock filed to launch the iShares Bitcoin Premium Income ETF, a second Bitcoin investment product that generates monthly income
• The new ETF will hold Bitcoin, cash, and shares of BlackRock’s existing IBIT fund while selling call options to create yield
• BlackRock’s current IBIT Bitcoin ETF holds nearly $70 billion in assets, making it the largest crypto-focused ETF
• Coinbase will serve as Bitcoin custodian while BNY Mellon handles cash and IBIT share custody
• The covered-call strategy trades potential upside for monthly premium income, similar to how Ethereum and Solana ETFs generate yield through staking

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BlackRock has submitted a filing with the Securities and Exchange Commission to launch a new Bitcoin investment product. The iShares Bitcoin Premium Income ETF would give investors exposure to Bitcoin while also generating monthly income.

The world’s largest asset manager plans to hold Bitcoin directly in the new fund. It will also hold cash and shares of BlackRock’s existing iShares Bitcoin Trust, known as IBIT. This setup differs from the company’s current Bitcoin ETF, which launched in 2024.

The new fund will generate income through a covered-call strategy. BlackRock’s investment advisor will sell call options on IBIT shares to capture option premiums. These premiums will provide the monthly income for investors.

The filing states that shares in the new ETF are not equivalent to direct Bitcoin investment. However, they offer an alternative way to gain Bitcoin exposure through traditional securities markets. The income generation feature sets it apart from standard spot Bitcoin ETFs.

Growing Demand for Bitcoin Investment Products

BlackRock’s IBIT has become the largest crypto-focused ETF since its 2024 launch. The fund currently holds nearly $70 billion worth of Bitcoin, according to DefiLlama data. Fidelity’s Bitcoin ETF ranks second with $17 billion in Bitcoin holdings.

The filing follows Morgan Stanley’s announcement earlier this month to launch its own spot Bitcoin ETF. Jeff Park, investment chief at ProCap BTC, noted it is unusual for a new product to launch two years after the market leader has established dominance. The move suggests strong demand for Bitcoin products from traditional finance firms.

BlackRock CEO Larry Fink has publicly supported Bitcoin and blockchain technology. He has praised Bitcoin’s fixed supply cap and its resistance to currency debasement. Last week at the World Economic Forum in Davos, Switzerland, Fink said moving financial markets onchain was “necessary.”

Fink told attendees that blockchain technology could reduce fees and increase democratization. He suggested a common blockchain could help reduce corruption in financial markets.

Fund Structure and Custody Arrangements

The new covered-call product joins a growing list of yield-generating crypto investment vehicles. These products trade potential price upside for regular income payments. The strategy mirrors how Ethereum and Solana ETFs generate returns through staking rewards.

Coinbase will serve as the Bitcoin custodian for the iShares Bitcoin Premium Income ETF. BNY Mellon will handle custody for the fund’s cash holdings and IBIT shares. The fund does not yet have an assigned ticker symbol.

The covered-call approach involves selling call options at fixed prices. When investors buy these options, they pay premiums that become income for the fund. This generates monthly payments for shareholders while maintaining Bitcoin exposure through the underlying holdings.

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