BlackRock Files Bitcoin Premium Income ETF Application with SEC

TLDR

• BlackRock filed for a new Bitcoin Premium Income ETF that uses covered-call options to generate yield from Bitcoin holdings
• The ETF would be a sequel to BlackRock’s $87 billion iShares Bitcoin Trust (IBIT), which has attracted $60.7 billion in inflows since January 2024
• BlackRock now holds over $101 billion in digital assets and generates more than $260 million annually from crypto ETFs
• SEC approved new generic listing standards that could accelerate crypto ETF approvals from 240 days to just 75 days
• The new rules may fast-track approvals for Solana, XRP, Litecoin and Dogecoin ETFs that have been waiting over a year

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BlackRock has filed paperwork for a new Bitcoin Premium Income ETF that would generate yield through covered-call options. The world’s largest asset manager registered a Delaware trust company on Thursday for the proposed product.

Bloomberg ETF analyst Eric Balchunas said the new fund would sell covered call options on Bitcoin futures to collect premiums. This strategy creates regular income distributions for investors but limits potential gains compared to direct Bitcoin exposure.

The proposed ETF represents BlackRock’s latest expansion into cryptocurrency products. The company already operates the iShares Bitcoin Trust (IBIT), which has become the largest Bitcoin ETF with $60.7 billion in inflows since launching in January 2024.

BlackRock’s digital asset business now generates over $260 million in annual revenue. The firm earns $218 million from Bitcoin products and $42 million from Ethereum funds according to Onchain Foundation data.

The asset manager holds more than 756,000 Bitcoin worth $85.29 billion in custody. It also manages 3.8 million Ethereum tokens valued at nearly $16 billion, making it the largest institutional custodian of both cryptocurrencies.

BlackRock’s total digital asset holdings exceed $101 billion when including smaller cryptocurrency positions. The firm regularly purchases during market downturns, which has strengthened its position in crypto markets.

New SEC Rules Speed Up Crypto ETF Process

The Securities and Exchange Commission recently approved new listing rules that could accelerate crypto ETF launches. On September 18, regulators voted to allow exchanges including Nasdaq, Cboe BZX, and NYSE Arca to adopt generic listing standards.

The new framework replaces lengthy case-by-case reviews that previously delayed applications for months or years. Asset managers can now bring products to market in as little as 75 days compared to up to 240 days under the old system.

Analysts expect Solana and XRP ETFs to be among the first beneficiaries. Both cryptocurrency funds have awaited approval for more than a year under the previous review process.

Bitcoin Yield Products Address Traditional Finance Concerns

Traditional finance companies previously avoided Bitcoin partly because it doesn’t generate native yield. BlackRock’s covered-call strategy addresses this concern by creating regular income distributions.

The approach trades potential upside gains for steady income payments. Investors receive premiums from selling call options but may miss out on large Bitcoin price increases.

Strategy’s STRK product offers another example of Bitcoin yield generation. The fund leverages 639,835 Bitcoin to provide stable income through convertible preferred stock offerings.

BlackRock appears focused on building around Bitcoin and Ethereum rather than pursuing other cryptocurrencies. Balchunas noted this approach leaves the field “much more wide open” for competitors seeking altcoin ETF approvals.

The SEC’s new generic listing standards may cover any cryptocurrency with at least six months of futures trading on Coinbase Derivatives Exchange. This could open doors for more than a dozen altcoin ETFs including Litecoin, Dogecoin, and others.

BlackRock’s Ethereum fund recorded $512 million in net inflows last week according to Farside Investors. The company reported $14.1 billion in digital asset inflows during the second quarter alone, making crypto one of its fastest-growing product categories.

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