BlackRock Files for iShares Bitcoin Managed Protection ETF
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Article Content
BlackRock’s proposed Bitcoin fund, the iShares Bitcoin Managed Protection ETF (PBIT), would utilize options to limit potential losses and gains, adding another strategy to their existing Bitcoin and Ether ETF offerings.
As the world’s largest asset manager, BlackRock aims to expand its crypto fund lineup with a Bitcoin ETF that offers limited downside protection in exchange for capped gains. They filed a preliminary prospectus with the US Securities and Exchange Commission (SEC) on Monday for PBIT.
The ETF would not hold Bitcoin (BTC) directly but instead use options linked to BlackRock’s iShares Bitcoin Trust ETF (IBIT). IBIT is the world’s largest spot Bitcoin ETF by assets, with $65.7 billion in net assets as of Monday, according to BlackRock.
BlackRock also operates the iShares Ethereum Trust ETF (ETHA), a spot Ether fund with $8 billion in net assets. However, they have yet to launch US spot ETFs for other cryptocurrencies like Solana or XRP.
ETF Store president Nate Geraci expressed surprise at BlackRock’s absence from the spot ETF market for cryptocurrencies other than Bitcoin and Ethereum:
“Still shocked they’re sitting out on spot ETFs for SOL, XRP, HYPE, etc. BlackRock clearly has high conviction in only sticking [with] BTC [and] ETH. For now.”
BlackRock’s crypto ETF lineup includes two Bitcoin funds and two Ether funds.
Bloomberg ETF analyst James Seyffart noted that PBIT would be BlackRock’s third Bitcoin ETF filing, although similar "buffered" Bitcoin funds already exist from Calamos, First Trust, and Innovator.
PBIT would employ three sets of overlapping options contracts, typically replacing one each month, to seek downside protection while limiting potential gains. Each options tranche would initially target a maximum loss exposure of about 10% to the underlying Bitcoin-linked asset, before fees and expenses. BlackRock cautioned that the fund "does not provide a fixed Tranche Protection Start Value, Floor or Tranche Cap Value," implying potential greater losses for investors.