BlackRock, the world’s largest asset manager, announced the iShares Bitcoin Trust ETF (IBIT39) launch in Brazil on Thursday. Starting today, Friday, March 1, shares of this index fund, which tracks the spot price of Bitcoin (BTC), will be traded on the Brazilian Commodities and Futures Exchange, known as B3.

BlackRock Launches IBIT39 Bitcoin ETF In Brazil

Karina Saade, president of BlackRock in Brazil, highlighted the company’s commitment to providing high-quality access vehicles to investors in the digital asset market. She stated:

IBIT39 is a natural progression of our efforts over many years and builds on the fundamental capabilities we have established so far in the digital asset market.

Felipe Gonçalves, Superintendent of Interest and Currency Products at B3 discussed the growth of the listed crypto market in Brazil. He noted that the market, which started in 2021, now has 13 ETFs with total assets of R$2.5 billion, or about $505 million.

While the market experienced fluctuations in its early years, it reached an eye-catching daily trading volume of R$30 million reais ($6.6 million) by the end of last year, according to local media reports in Brazil. 

Gonçalves mentioned that investors in crypto ETFs include institutional investors, such as funds, and individual investors, with a current number of 170,000. Liquidity in the market is provided by non-residents investing in B3 as a whole.

IBIT39 will reportedly have a management fee of 0.25%, with a one-year waiver that reduces the fee to 0.12% once the fund reaches its first $5 billion in assets under management (AUM). The product will be made available to the general public, allowing broader participation in the Bitcoin market.

$7.5B Net Inflow In Bitcoin ETFs Since Launch In The US

BlackRock’s IBIT (iShares Bitcoin Trust) ETF has emerged as a notable player in the US ETF race, countering a significant outflow from Grayscale’s Bitcoin Trust (GBTC).

BitMEX research data shows that on February 29, 2024, positive flows amounted to $92 million for the day. Notably, BlackRock and GBTC offset each other, experiencing $600 million in opposite directions. The data shows that since the ETFs began trading on January 11, 2024, there has been an impressive net inflow of $7.5 billion.

The overall holdings of spot funds, which directly hold Bitcoin, stood at 776,464 BTC (equivalent to $47.7 billion) on Friday morning, according to BitMEX Research. It’s essential to consider that the total BTC supply currently in circulation is 19.64 million, with a maximum limit of 21 million. 

With this context, the fact that the ETFs have secured 4% of the total BTC supply is a significant milestone. It demonstrates the growing demand for Bitcoin among investors utilizing these index funds to gain exposure to the cryptocurrency.

BTC continues to consolidate above the $62,000 mark, rising 1.3% in the past 24 hours.

Featured image from Shutterstock, chart from TradingView.com

The Financial Action Task Force (FATF) has recently adjusted Russia’s compliance rating to “partially compliant” in terms of its ability to monitor and combat suspicious transactions involving virtual assets. 

Reason for Russia’s downgrade

Reports from RBC indicate that this downgrade is primarily due to shortcomings in Russia’s 2020 “On Digital Financial Assets” legislation. The law defines digital financial asset (DFA) providers but does not clearly identify which entities are permitted to act as DFA and cryptocurrency providers, creating a gap in the regulatory oversight of digital currencies and assets.

Furthermore, Russia’s current digital financial services regulations prohibit the use of digital currencies for payment by its citizens, yet they lack a comprehensive framework for regulating and supervising cryptocurrency transactions. This lack of detailed regulation has been linked to an increase in illicit transactions using crypto assets. According to Rosfinmonitoring, Russia’s financial monitoring service, there has been a notable surge in illegal transactions involving cryptocurrencies, doubling in number in 2023.

The FATF, an intergovernmental organization aimed at setting global standards to prevent money laundering and terrorist financing, had awarded Russia the highest compliance score in 2019. However, Russia’s influence within the FATF was reduced in 2022 amidst geopolitical tensions, which has further complicated its standing in the international financial community.

Rosfinmonitoring’s data reveal a tripling in the volume of illegal crypto transactions from the start of the previous year to November, underscoring the pressing need for regulatory updates. The agency has called for quick action to address the regulatory vacuum and improve the country’s defenses against financial crimes facilitated by digital currencies.

Amid these regulatory challenges, there are reports that Russia is proposing the creation of a payment system among BRICS nations using central bank digital currencies (CBDCs) for trade settlements, aiming to enhance financial cooperation and reduce reliance on traditional global financial mechanisms.