BlockFi, a major hub for crypto lending, appears to be increasing its courting of institutional bitcoin bets through a new bitcoin trust product.

The trust, revealed in Friday regulatory filings, could put BlockFi in direct competition with Grayscale for bitcoin-friendly Wall Street investors’ attention and dollars. Grayscale’s own bitcoin (BTC, +4.89%) trust is one of the single-largest bitcoin investment vehicles on the market. CoinDesk parent company Digital Currency Group also owns Grayscale.

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The “BlockFi Bitcoin Trust” has yet to raise any money from investors, according to its U.S. Securities and Exchange Commission filing. Key factors about the fund’s structure were not available at press time. However, the fund’s status as a Rule 506(c) exempt offering gives BlockFi room to market the trust publicly.

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Decrypt | Ekin Genç | Jan 30, 2021

Why are these trusts so popular?

Still, Bitcoin trusts like these are the closest thing the industry can get to a Bitcoin Exchange-Traded Fund, or ETF, which would sell (far cheaper) shares that represent Bitcoin purchased by a fund manager.

These shares would trade on the stock market; retail investors could purchase shares in a Bitcoin ETF and invest their pension in them, for instance.

But the SEC has repeatedly blocked applications for Bitcoin ETFs on the grounds that the crypto market is easily manipulable.

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Some companies, among them VanEck and Valkyrie Digital Assets, refiled or submitted applications for a Bitcoin ETF shortly after the previous SEC Chair, Jay Clayton, stepped down. A fresh White House and SEC staff roster renew hope.

While the ETF industry waits, trusts like Grayscale’s have gone from strength to strength. The Grayscale Bitcoin trust now holds $22.9 billion.

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