Experts say BlackRock’s Bitcoin ETF is different from Grayscale’s product.

The language used in Exchange Traded Fund (ETF) terminology can sometimes be difficult to understand. Recently, BlackRock, a large fund management company, applied for a spot Bitcoin ETF which has raised some questions.

BlackRock’s iShares unit filed an application with the US Securities and Exchange Commission (SEC) for the creation of the iShares Bitcoin Trust. The name and other details of the proposal caused confusion among industry experts as to whether BlackRock was applying for an ETF or a trust with properties similar to the Grayscale Bitcoin Trust (GBTC).

The answer is that BlackRock is applying for both. Noelle Acheson, editor of Crypto is Macro Now, said: “It’s a reminder of just how complex ETF terminology is. Technically, BlackRock’s proposal is for a trust, but it’s a trust that allows redemptions, so it functions just like an ETF.”

The iShares product is therefore not like GBTC, which has no redemption mechanism. The key distinction is that an ETF for spot bitcoin “would be able to buy bitcoin at the end of the trading day to bring the fund’s assets in line with its trading price. A trust does not have the ability to do this,” said Joe Consorti, market analyst at The Bitcoin Layer.

Grayscale has been trying to convert its trust to a spot bitcoin ETF for some time, but the SEC has rejected its efforts citing concerns about market manipulation. BlackRock, however, is hoping to get past these concerns with a “surveillance-sharing agreement” between exchanges.

Edited by Stephen Alpher.

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