BlackRock has taken a significant step toward expanding its Bitcoin investment products by registering a Delaware trust company for its proposed Bitcoin Premium Income ETF.
This move signals the asset manager’s intent to launch a yield-focused ETF that would operate alongside its successful spot Bitcoin ETF, IBIT.
BlackRock seeks bitcoin yield
According to Bloomberg ETF analyst Eric Balchunas, the new fund would employ a covered call strategy on Bitcoin futures, selling options to collect premiums and generate regular yield for investors.
However, this approach trades away some of the potential upside from direct Bitcoin exposure, as investors exchange growth for consistent income.
Balchunas explained:
“This is a covered call Bitcoin strategy in order to give BTC some yield. This will be a ’33 Act spot product, sequel to the $87b $IBIT.”
Regulatory process and growing bitcoin ETF market
Registering a Delaware trust is typically a precursor to submitting an S-1 or 19b-4 filing with the Securities and Exchange Commission (SEC), formally starting the approval process.
The SEC has recently shown more openness to bitcoin investment products, particularly following the popularity of BlackRock’s IBIT ETF, which has attracted over $60.7 billion in inflows since January 2024.
The Fidelity Wise Origin Bitcoin Fund (FBTC) is the next largest, with $12.3 billion.
Yield products emerge for bitcoin
Traditionally, many institutional investors overlooked bitcoin due to its lack of native yield.
However, new solutions are appearing, such as Strategy’s STRK, a convertible preferred stock offering that leverages its bitcoin holdings to provide income.
If approved, BlackRock’s Premium Income ETF would join a small but growing set of yield-generating bitcoin products in the U.S.
Focus remains on bitcoin and ether
Balchunas noted that despite a surge in ETF filings for various altcoins, BlackRock appears focused on building around bitcoin and ether, opting not to participate in the broader altcoin ETF trend for now.
