BlackRock’s approach to Bitcoin ETFs addresses the lack of income options in the crypto market

BlackRock, the globe’s top asset manager, has submitted a proposal to introduce a

Premium Income ETF, a product aimed at generating yield to supplement its current $87 billion spot Bitcoin ETF (IBIT). The company has established a Delaware trust company as a foundational step for this new fund, a move that typically comes before an official ETF application to the SEC. The planned iShares Bitcoin Premium Income ETF seeks to deliver income by writing covered call options on Bitcoin futures, offering investors regular payouts but limiting the potential for gains if Bitcoin’s price surges. Bloomberg ETF analyst Eric Balchunas referred to the fund as a “covered call Bitcoin strategy” focused on producing yield, positioning it as a successor to IBIT.

This initiative by BlackRock highlights the growing institutional appetite for Bitcoin-based income products, as traditional finance players look for ways to address Bitcoin’s lack of inherent yield. Since its January 2024 debut, BlackRock’s IBIT has drawn in over $60.7 billion, far surpassing rivals such as Fidelity’s $12.3 billion FBTC. The new ETF would join a niche but expanding group of Bitcoin offerings that aim to provide returns beyond simple price movements. For instance, STRK, a convertible preferred stock from a strategy firm, uses its Bitcoin assets to generate steady income for its holders.

The regulatory environment for crypto ETFs is changing quickly, especially under the Trump administration, which has shown a willingness to approve a broader array of digital asset products. The SEC has recently adopted a general listing rule for commodity-based trust shares, cutting the approval process for crypto ETFs from 240 days to as little as 75. This regulatory shift, along with the administration’s broader support for crypto—including the possibility of a national Bitcoin reserve—has sped up institutional involvement. In 2025, BlackRock’s Bitcoin and

ETFs brought in $260 million in annual revenue, with Bitcoin products contributing $218 million. BlackRock’s leadership in this space is further demonstrated by its role as the largest institutional holder of both Bitcoin and Ethereum, with $85.29 billion in Bitcoin and $16 billion in Ethereum under custody.

Experts believe the new ETF could alter the competitive dynamics for crypto investment products. Balchunas pointed out that BlackRock’s focus on Bitcoin and Ether, rather than launching altcoin ETFs, leaves opportunities for other companies to compete in markets for assets like

(SOL) and XRP. This approach fits with BlackRock’s broader digital asset strategy, which includes launching a tokenized money market fund (BUIDL) and exploring ETF tokenization on JPMorgan’s Kinexys blockchain. Larry Fink, BlackRock’s CEO, has long promoted the idea of tokenizing all financial assets—a vision that is increasingly being realized in the industry.

The ultimate success of the proposed ETF depends on regulatory clearance and investor interest. If approved, it would provide a structured way for investors to benefit from Bitcoin’s price swings while earning income, appealing especially to those seeking lower risk. However, the covered call approach naturally restricts the potential for large gains, which may attract investors who prefer consistent returns over high-risk speculation. The product will also face competition from existing yield-oriented Bitcoin funds like STRK, as well as possible future offerings focused on altcoins.

Source: [1]

Proposes Bitcoin Premium Income ETF to Complement …