In a significant move for the cryptocurrency market, BlackRock has submitted a filing to the Securities and Exchange Commission (SEC) for the iShares Bitcoin Premium Income ETF, marking its second Bitcoin-focused investment product. This new exchange-traded fund (ETF) aims to offer investors exposure to Bitcoin while simultaneously generating monthly income.
The proposed ETF will hold a combination of Bitcoin, cash, and shares of BlackRock”s existing iShares Bitcoin Trust, known as IBIT. This approach differs from the original IBIT Bitcoin ETF, which launched in 2024 and has since accumulated nearly $70 billion in assets, establishing it as the largest crypto-focused ETF to date.
The income generation strategy for the new ETF centers around a covered-call approach. BlackRock”s investment team plans to sell call options on the IBIT shares, allowing the fund to capture option premiums, which will translate into monthly income for its investors. While shares of this ETF do not equate to direct investment in Bitcoin, they present a compelling alternative for those looking to gain Bitcoin exposure via traditional financial markets.
The growing demand for Bitcoin investment products has not gone unnoticed, as BlackRock”s existing IBIT fund has already outperformed competitors, such as Fidelity”s Bitcoin ETF, which holds approximately $17 billion in Bitcoin assets. The recent filing follows a similar announcement by Morgan Stanley regarding their own plans to launch a spot Bitcoin ETF, indicating a robust interest from established finance firms in the crypto space.
During a recent event at the World Economic Forum in Davos, Switzerland, BlackRock CEO Larry Fink expressed strong support for Bitcoin and blockchain technology. He highlighted Bitcoin”s fixed supply cap and its potential to resist currency debasement, emphasizing that transitioning financial markets onto blockchain could enhance transparency and reduce costs.
As part of the operational framework for the iShares Bitcoin Premium Income ETF, Coinbase has been designated as the Bitcoin custodian, while BNY Mellon will manage the custody for the fund”s cash and IBIT shares. The ETF”s ticker symbol has yet to be assigned.
This innovative covered-call strategy, which trades off potential price appreciation for regular income payments, aligns with how other crypto investment vehicles, such as Ethereum and Solana ETFs, generate returns by leveraging staking rewards. This method underscores a growing trend in the cryptocurrency sector toward yield-generating investment products, catering to investors seeking both exposure and income.
As BlackRock continues to expand its footprint in the cryptocurrency landscape, the iShares Bitcoin Premium Income ETF represents a noteworthy development that could reshape how traditional investors approach Bitcoin.
