Blackrock and Grayscale Take Center Stage as City State Bank, Iowa Invests in Bitcoin ETFs

City State Bank, an Iowa-based financial institution, has revealed its exposure to Bitcoin through exchange-traded funds (ETFs). The bank’s recent 13F filing, dated July 8, 2024, highlights its growing interest in the crypto market. Notably, City State Bank invested in both BlackRock and Grayscale’s Bitcoin ETFs, signaling a broader trend that has gained momentum in recent years among traditional financial institutions diversifying into digital assets. 

For many traditional investors, Bitcoin has long been viewed as a risky and volatile asset. However, the launch of Bitcoin ETFs has helped bridge the gap between crypto and traditional finance.

ETFs provide a regulated and transparent way for investors to gain exposure to Bitcoin without having to directly purchase and store the cryptocurrency themselves.

The approval of the first Bitcoin ETF in the United States in October 2021 — ProShares Bitcoin Strategy ETF (BITO), a future-based ETF — was a major milestone for the cryptocurrency industry. Since then, several other Bitcoin ETFs have been launched, and with more being expected to follow in the coming months, more ‘crypto-thirsty’ traditional investors may seek to dip their toes in the digital assets waters —  like the City State Bank’s divestiture into IBIT and GBTC, or the Bank of New Hampshire’s IBIT investment.

City State Bank’s BlackRock iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust (GBTC) Store 

City State Bank in Iowa purchased 33 units of the BlackRock iShares Bitcoin Trust during the second quarter. The IBIT is one of the most prominent Bitcoin ETFs, providing investors with exposure to Bitcoin without the complexities of direct crypto ownership. This move reflects the bank’s confidence in the long-term potential of Bitcoin as a legitimate asset class or store of value within mainstream finance. 

In addition to its new position in the BlackRock IBIT, City State Bank maintained its holdings in the Grayscale Bitcoin Trust. The bank had acquired 50 units of GBTC in the first quarter of 2024 and chose to retain this investment. This sustained confidence in GBTC underscores the bank’s belief in Bitcoin’s prospects.

Bank of New Hampshire (BNH)

Another financial institution, Bank of New Hampshire (BNH), revealed its Bitcoin ETF exposure in a recent SEC filing dated July 1, 2024. BNH invested $9,389 in BlackRock’s IBIT, acquiring 275 units. While the amount may not be a ‘king’s ransom’ (huge), as they say, it represents BNH’s entry into the crypto market and aligns with the broader strategic trend within the TD group (BNH’s parent company) toward embracing cryptocurrencies.

BlackRock’s spot Bitcoin ETF (IBIT) has become the largest product of its kind, surpassing Grayscale’s GBTC. IBIT currently holds nearly $20 billion worth of Bitcoin, demonstrating even more institutional confidence in the asset.

In all, the increasing availability of Bitcoin ETFs is likely to fuel institutional interest in cryptocurrency further. As more and more institutions gain exposure to Bitcoin, the asset class is expected to mature and become more mainstream.

While the future of Bitcoin remains uncertain, recent developments suggest that the cryptocurrency is here to stay. With growing institutional interest and the increasing availability of regulated investment vehicles, Bitcoin is well-positioned for continued growth in the years to come.