BNP Paribas Dives into Bitcoin ETF

In a notable shift within the financial sector, multinational bank BNP Paribas has taken its first steps into the cryptocurrency market by purchasing shares in BlackRock’s iShares Bitcoin Trust (IBIT). This move was disclosed through a Form 13F filing with the U.S. Securities and Exchange Commission (SEC) on May 1, revealing that the bank acquired 1,030 IBIT shares at $40.47 each, totalling $41,684.10.

This investment by BNP Paribas, Europe’s second-largest bank by assets, represents a modest foray into cryptocurrency, given the current value of Bitcoin. Yet, it is significant as it marks one of the first instances where a major financial institution has engaged with a spot Bitcoin ETF, supporting the theory that such ETFs would attract institutional investors.

The requirement for institutional investment managers controlling over $100 million in assets to submit quarterly 13F reports sheds light on their investment movements. This regulatory obligation extends to foreign banks like BNP Paribas that engage in U.S. transactions, such as purchasing ETFs issued by American companies.

Despite this progressive move by BNP Paribas, a report from Goldman Sachs shortly after the SEC’s approval of multiple spot Bitcoin ETFs in January suggested that institutional adaptation might not be swift. This cautious stance is supported by Matt Hougan, CIO at Bitwise, who noted that the process for professional investors to engage with Bitcoin ETFs could extend over a couple of years, pending individual due diligence assessments.

Since their introduction, Bitcoin ETFs have witnessed $11.2 billion in net inflows, despite facing $17.4 billion in outflows from the Grayscale Bitcoin Trust (GBTC). However, recent trends show a decline in interest, with significant outflows recorded, particularly in the wake of the U.S. Federal Reserve’s decision to maintain interest rates, which has made investors wary of riskier assets like cryptocurrencies and stocks.

This investment marks a reversal for BNP Paribas, which had previously distanced itself from cryptocurrencies. In September 2022, Sandro Pierri, head of BNP Paribas Asset Management, expressed disinterest in the crypto sector, citing a lack of client demand.

BNP Paribas’ entry into the Bitcoin ETF market is a clear indicator of the evolving perspectives towards cryptocurrencies in traditional banking, reflecting a broader acceptance as these assets become more mainstream in the financial world.