TLDR
- BlackRock filed for a Bitcoin Premium Income ETF using covered-call options to generate yield from Bitcoin holdings
- The ETF would complement BlackRock’s existing $60.7 billion iShares Bitcoin Trust (IBIT) with income-focused strategy
- SEC approved new generic listing standards reducing crypto ETF approval times from 240 days to 75 days
- BlackRock manages over $101 billion in digital assets and generates $260+ million annually from crypto ETFs
- New rules could accelerate pending Solana, XRP, Litecoin and Dogecoin ETF applications
BlackRock has submitted paperwork for a Bitcoin Premium Income ETF that would generate yield through covered-call strategies. The world’s largest asset manager registered a Delaware trust company for the proposed fund, signaling plans to expand its cryptocurrency offerings beyond direct Bitcoin exposure.
The new ETF would sell covered call options on Bitcoin futures to collect premiums for regular distributions. While this approach generates income, it limits potential gains compared to BlackRock’s spot Bitcoin ETF that tracks price movements directly.
Bloomberg ETF analyst Eric Balchunas described the product as a “sequel” to BlackRock’s massively successful iShares Bitcoin Trust (IBIT). Since launching in January 2024, IBIT has attracted $60.7 billion in inflows, making it the largest Bitcoin ETF by far.
BlackRock Dominates Crypto ETF Market
BlackRock’s digital asset business generates over $260 million annually, with $218 million from Bitcoin products and $42 million from Ethereum funds. The firm holds more than 756,000 Bitcoin worth $85.29 billion and 3.8 million Ethereum tokens valued near $16 billion.
Total digital asset custody under BlackRock management exceeds $101 billion. The company regularly purchases during market downturns, strengthening its position as the leading institutional crypto custodian.
BlackRock’s Ethereum ETF recorded $512 million in net inflows last week alone. The firm reported $14.1 billion in digital asset inflows during Q2, making crypto one of its fastest-growing product categories despite representing just 1% of assets under management.
New SEC Rules Accelerate Crypto ETF Process
The Securities and Exchange Commission approved new generic listing standards on September 18 that dramatically reduce crypto ETF approval times. The new framework allows asset managers to launch products in 75 days compared to up to 240 days under previous case-by-case reviews.
Exchanges including Nasdaq, Cboe BZX, and NYSE Arca can now adopt standardized listing requirements for cryptocurrency products. The change removes lengthy individual assessments that delayed applications for months or years.
Analysts expect Solana and XRP ETFs to benefit first from the streamlined process. Both funds have awaited approval for over a year under the old system. Bloomberg’s James Seyffart called the new rules “the crypto ETP structure we’ve been waiting for.”
Bitcoin Yield Products Address TradFi Concerns
Traditional finance companies previously avoided Bitcoin partly because it doesn’t generate native yield like bonds or dividend-paying stocks. BlackRock’s covered-call approach addresses this concern by creating regular income streams.
The strategy trades potential upside for steady distributions. Investors receive option premiums but may miss large Bitcoin price increases when call options are exercised.
SEC Chair Paul Atkins said the regulatory changes balance innovation with investor protection, reflecting the Trump administration’s embrace of digital assets. This contrasts sharply with Biden-era delays and repeated ETF denials.
The new framework may cover any cryptocurrency with at least six months of futures trading on Coinbase Derivatives Exchange. This could enable more than a dozen altcoin ETFs including Litecoin, Dogecoin and others.
BlackRock appears focused on Bitcoin and Ethereum rather than pursuing other cryptocurrencies. Balchunas noted this leaves the altcoin ETF market “much more wide open” for competitors.
