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BlackRock Filings Hint at Bitcoin Futures Trading

Asset manager BlackRock outlines risk factors and limits on bitcoin futures trading in SEC documents.
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BlackRock Inc.  (BLK) - Get BlackRock Inc. Report said in regulatory filings for two of its funds Wednesday that it may trade in bitcoin futures, notwithstanding considerable risks associated with the cyber currency. 

BlackRock disclosed the move in filings for its BlackRock Global Allocation Fund, Inc. and BlackRock Funds V. 

Among the risk factors surrounding such holdings, “A Fund’s investment in bitcoin futures may involve illiquidity risk, as bitcoin futures are not as heavily traded as other futures given that the bitcoin futures market is relatively new,” BlackRock said in the filings. 

BlackRock noted that “Exchanges, where bitcoin is traded (which are the source of the price(s) used to determine the cash settlement amount for a Fund’s bitcoin futures), have experienced technical and operational issues, making bitcoin prices unavailable at times. In addition, the cash market in bitcoin has been the target of fraud and manipulation, which could affect the pricing of bitcoin futures contracts.” 

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Also, “bitcoin and bitcoin futures have generally exhibited significant price volatility relative to more traditional asset classes. Bitcoin futures may also experience significant price volatility as a result of the market fraud and manipulation noted above,” according to the filings. 

“The further development of the bitcoin network, which is part of a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate. The only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC,” BlackRock said in the filings. 

Prices for bitcoin have surged to records in recent weeks, trading as high as $41,946.74 earlier this month, according to Yahoo Finance data. That’s more than 10 times the 52-week low of $4,106.98 for the cryptocurrency.  

On Wednesday, bitcoin was trading at $35,225.80, according to Yahoo Finance.

Shares of BlackRock added just over 1% in regular trade Wednesday to close at $741.54. The stocks were edged up 0.13% in after-hours trade.