"Because a significant proportion of arbitrage funds is included in BlackRock's ETF net inflows."
I really cannot understand how the artist came to this conclusion.

I am very confused; I have doubts about data-related matters.
I need certainty; otherwise, I cannot trust such data.
I directly referred to BlackRock's iBIT prospectus for this.

The first core question: How is BlackRock's ETF managed? Can there be a time difference to conduct an arbitrage operation using the time difference of the funds invested by investors in the ETF, or buy low and sell high to investors?

The first page already has an explanation, the original text is as follows:

The material terms of the Trust are discussed in greater detail under the section 'Description of the Shares and the Trust Agreement.' The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of bitcoin.

The main terms of the trust fund are discussed in more detail in the section 'Description of the Shares and the Trust Agreement.' The trust fund is a passive investment tool that does not seek to achieve excess returns outside of tracking Bitcoin prices.

This means the Sponsor does not speculatively sell bitcoin at times when its price is high or speculatively acquire bitcoin at low prices in the expectation of future price increases. It also means the Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective.

This means the Sponsor will not speculatively sell bitcoin when its price is high, nor will it speculatively buy bitcoin when prices are low in expectation of future price increases. It also means the trust fund will not utilize leverage, derivatives, or any similar arrangements to achieve its investment objectives.

The first question is clearly stated in the prospectus: BlackRock will not use any leverage, derivatives, or any similar arrangements to achieve its investment objectives, which certainly includes the so-called 'arbitrage.'

The second question: A significant proportion of arbitrage funds is included in BlackRock's ETF net inflows. What is the exact percentage? Is it 50%, 80%, or 90%?

Based on the explanation on the first page of the prospectus, the second question is moot.

If BlackRock's ETF is like this, other ETFs are also similar to BlackRock's. Interested parties can refer to the prospectuses of other BTC ETFs like Fidelity.

The prospectus has made it very clear, of course, many conspiracy theories have come up again. BlackRock can privately engage in 'arbitrage'; after all, users have no way of knowing.

So let me ask GPT, if BlackRock does not comply with the commitments in the prospectus, what negative impacts could arise?

If BlackRock does not comply with the commitments in the prospectus, it may face various penalties and legal consequences. These penalties can include, but are not limited to:

Regulatory penalties: The U.S. Securities and Exchange Commission (SEC) may investigate BlackRock and impose fines or other forms of sanctions.
If BlackRock violates the Commodity Futures Trading Commission (CFTC) regulations, it may also face penalties from the CFTC.

Civil lawsuits: Investors can file civil lawsuits against BlackRock seeking compensation for losses caused by its non-compliance with the commitments in the prospectus.
Class action lawsuits: If a large number of investors are affected, they can band together to file a class action lawsuit against BlackRock.

Reputational damage: Violating commitments in the prospectus can severely harm BlackRock's reputation, affecting its credibility and standing in the financial markets.
This reputational damage may lead to client attrition and reduced business opportunities.

Market reaction: If the market believes that BlackRock has failed to comply with the commitments in the prospectus, its stock price may fall, negatively impacting the company's market value.

Internal penalties: BlackRock may impose disciplinary measures on the responsible parties, including termination, demotion, or other disciplinary actions.

Considering the small arbitrage return rate relative to BTC, does BlackRock really need to take such significant risks, especially with SEC regulations and strict enforcement for such a small so-called 'arbitrage'?
#BTCETF #BTC
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