BlackRock’s Bitcoin ETF Filing Drops Quantum Bomb: ’Your Keys Could Be Cracked’
Wall Street’s crypto embrace just hit a sci-fi snag. In its latest Bitcoin ETF prospectus, BlackRock warns quantum computers could one day ’decrypt current cryptographic standards’—including the algorithms protecting your Bitcoin stash.
The Existential Threat No One’s Talking About
While traders obsess over Fed rates and ETF flows, the filing quietly flags a longer-term risk: advanced quantum machines might eventually break SHA-256 encryption. Translation? That hardware wallet under your mattress isn’t future-proof.
Hedgies Meet Hedging
The disclosure reads like a CYA move for institutional investors—after all, what’s a trillion-dollar asset manager without a worst-case scenario? But buried in the legalese is a sobering truth: the crypto industry’s ’trustless’ ethos relies on math that might not stand the test of time (or quantum supremacy).
Meanwhile, Goldman Sachs analysts were reportedly overheard asking if they could quantum-short Satoshi’s wallet. Some things never change.
BlackRock Flags Theoretical Quantum Risks to Bitcoin Security
In the filing, the asset manager warned that future advancements in quantum computing may undermine the security framework underpinning Bitcoin.
Should quantum technology evolve far beyond its current state, it could render the cryptographic algorithms used by Bitcoin obsolete.
This could allow malicious actors to exploit vulnerabilities, including gaining unauthorized access to wallets that store bitcoin for the trust or its investors.
While quantum computing is still developing, BlackRock emphasized that the technology’s full capabilities remain uncertain.
However, the firm considers it important to disclose any theoretical threats that could affect the performance or security of its crypto investment products.
Bloomberg ETF analyst James Seyffart said the update is a key factor that is standard in ETF filings. He explained that issuers routinely list all potential threats, no matter how remote.
“To be clear. These are just basic risk disclosures. They are going to highlight any potential thing that can go wrong with any product they list or underlying asset thats being invested in. It’s completely standard. And honestly makes complete sense,” Seyffart added.
Notably, BlackRock’s filing also covers concerns about regulatory actions, energy consumption, mining concentration in China, network forks, and prior market events like the collapse of FTX.
Despite these warnings, IBIT remains the largest spot Bitcoin ETF on the market. It has recorded 19 consecutive days of inflows, attracting more than $5.1 billion during the reporting period.
Ethereum ETF Filing Adds In-Kind Redemption Structure
In a separate filing, Seyffart revealed that BlackRock also amended its S-1 application for its spot ethereum ETF.
The new version includes plans to support in-kind creation and redemption—a model allowing investors to swap ETF shares directly for Ethereum, instead of using cash.
This structure could lower transaction costs and reduce market friction. It also avoids converting crypto into fiat currency, which is currently required under the cash-based model. The approach may help issuers minimize price slippage and save on trading fees.
The SEC has yet to approve in-kind redemption models for crypto ETFs, but analysts expect progress this year.
“Eric Balchunas & I expect SEC approval for in-kind at some point this year…Notably, the first application for any of the Ethereum ETFs to allow In-kind create/redeem has a final deadline around ~10/11/25,” Seyffart noted.
BlackRock’s filing follows the firm’s meeting with the US Securities and Exchange Commission (SEC) to discuss crypto ETF staking and securities tokenization.
