BlackRock Highlights Quantum Computing Risks in Bitcoin ETF Filing, Signals Industry Readiness for Evolving Tech

Global asset management giant BlackRock has updated its S-1 registration statement for the iShares Bitcoin Trust (IBIT), bringing attention to a future-facing concern: the potential impact of quantum computing on Bitcoin’s underlying cryptographic systems.

Filed on May 9, the revised statement includes language that reflects growing industry awareness of how cutting-edge computing technologies might challenge the security foundations of digital assets. Specifically, BlackRock noted that significant advancements in quantum computing could theoretically compromise Bitcoin's cryptographic protocols—potentially enabling unauthorized access to wallets and transaction data.

While the threat remains hypothetical for now, BlackRock’s move to disclose it signals a commitment to transparency and a precautionary approach amid evolving technology. The firm emphasized that the full capabilities of quantum computing are still unknown but felt it necessary to inform investors of even the most remote risks to their holdings.

“This is a standard practice,” noted Bloomberg ETF analyst James Seyffart, who explained that ETF issuers regularly list all known and theoretical threats in their disclosures. “They’re just doing their due diligence. It makes complete sense.”

In addition to quantum risks, BlackRock’s filing also outlines more conventional concerns such as regulatory developments, energy consumption tied to mining, market volatility, and previous disruptions like the FTX collapse. Despite these factors, the iShares Bitcoin Trust continues to dominate the market, marking 19 straight days of inflows and drawing in over $5.1 billion in assets during the reporting period.

Ethereum ETF Update: In-Kind Redemption on the Horizon

In a related development, BlackRock also updated its S-1 filing for a spot Ethereum ETF. The amended version introduces an in-kind creation and redemption mechanism, which would allow institutional investors to exchange ETF shares directly for Ethereum rather than cash.

This method is expected to reduce transaction costs, lower market slippage, and eliminate the need to convert assets into fiat—an added efficiency that aligns with the operational models seen in traditional commodity ETFs.

While the U.S. Securities and Exchange Commission (SEC) has not yet approved in-kind redemptions for crypto ETFs, industry watchers are optimistic. Analysts including Seyffart expect the SEC to give the green light sometime in 2025, with a key deadline falling around October 11 of that year.

BlackRock’s filings follow recent meetings with the SEC to discuss broader crypto market structures, including staking and tokenization of securities, suggesting the firm is proactively positioning itself at the intersection of traditional finance and digital innovation.