Investment giant BlackRock has updated its application for a spot Bitcoin ETF with a description of all the risks associated with investing in BTC and other digital assets. Meanwhile, there have been indirect signs that the investment instrument will soon be approved by the U.S. Securities and Exchange Commission.
BlackRock’s application for a Bitcoin-based investment product has been updated. The document has been supplemented with five pages detailing the potential risks of investing in crypto exchange-traded funds.
According to the updated document, investors should consider the following factors related to BTC and other digital assets when deciding on financial investments:
- BTC volatility. The value of the fund’s shares directly depends on the price of Bitcoin, which is subject to fluctuations due to many factors: changes in the volume of BTC supply, demand for the asset, the general situation in the cryptocurrency market, the emergence of innovative blockchain technologies, and so on.
- Lack of diversification. The IBTC fund, for example, owns assets, 100% of which are BTC, so the success of investments in it fully relies on the volatility of the first cryptocurrency.
- Information risks. Manipulation and falsification of transactions on digital asset exchanges can distort trading volumes and prices, which can negatively affect the fund.
- Regulatory issues. Many digital assets and crypto exchanges remain subject to regulatory uncertainty that may pose risks related to market manipulation, data leakage, security issues, closure of platforms, and fraud.
However, despite all the risks listed by BlackRock representatives in the application, the company still considers Bitcoin the best alternative to traditional financial instruments.
At the same time, Depository Trust & Clearing Corporation (DTCC) published an updated list of assets in which shares of IBTC, BlackRock’s spot Bitcoin ETF, were found. Analysts see this as a signal of the application’s imminent approval. It’s worth noting that the quotes of the first cryptocurrency reacted to the news with active growth.
Initially, BlackRock applied for a spot Bitcoin ETF in the U.S. in June this year, but the regulator never approved it, causing outrage among local officials. Other investment funds in the U.S. have begun actively applying to issue spot Ethereum ETFs.
