BlackRock has updated its S-1 registration statement for the iShares Bitcoin Trust (IBIT), adding new information that describes potential risks related to quantum computing.
This update, submitted on May 9, reflects the growing awareness in the industry of how advanced computing technologies may impact the cryptographic systems used in digital assets.
BlackRock points to theoretical quantum risks to Bitcoin's security
In the document, the management company warned that future advancements in quantum computing could undermine the security foundation on which Bitcoin is based.
If quantum technology develops significantly beyond its current state, it could render the cryptographic algorithms used by Bitcoin obsolete.
This could allow malicious actors to exploit vulnerabilities, including unauthorized access to wallets storing Bitcoin for the trust or its investors.
Although quantum computing is still developing, BlackRock emphasized that the full capabilities of this technology remain uncertain.
However, the company believes it is important to disclose any theoretical threats that may impact the performance or security of its crypto investment products.
Bloomberg ETF analyst James Seyffart noted that this update is a key factor that is standard in ETF filings. He explained that issuers typically list all potential threats, regardless of how remote they may be.
"To be clear. These are just basic risk disclosures. They are going to highlight any potential thing that could go wrong with any product they list, or with the underlying asset they are investing in. This is absolutely standard. And, frankly, it makes complete sense," added Seyffart.
It is important to note that BlackRock's filing also addresses issues regarding regulatory actions, energy consumption, mining concentration in China, network forks, and prior market events such as the FTX collapse. Despite these warnings, IBIT remains the largest spot Bitcoin ETF on the market. It recorded 19 consecutive days of inflows, attracting over $5.1 billion during the reporting period.
The application for the Ethereum ETF includes a structure for in-kind redemption
In a separate filing, Seyffart revealed that BlackRock has also amended its S-1 application for its spot Ethereum ETF.
The new version includes plans to support creation and redemption in kind— a model that allows investors to exchange ETF shares directly for Ethereum, instead of using cash.
This structure may reduce transaction costs and decrease market friction. It also avoids the conversion of cryptocurrency into fiat currency, which is currently required under the cash model. The approach may help issuers minimize price slippage and save on trading fees.
The SEC has not yet approved the physical redemption models for crypto ETFs, but analysts expect progress this year.
"Eric Balchunas and I expect SEC approval for in-kind redemption at some point this year... It is important to note that the first application for any of the Ethereum ETFs allowing in-kind creation/redemption has a deadline of around ~10/11/25," stated Seyffart.
BlackRock's filing follows the company's meeting with the U.S. Securities and Exchange Commission (SEC) to discuss crypto ETF staking and tokenization of securities.
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