BlackRock has updated the S-1 registration for iShares Bitcoin Trust (IBIT), introducing new language that specifies potential risks caused by quantum computing.
This amendment, filed on 05/09/2025, reflects the industry's growing awareness of how advanced computing technologies could impact the encryption systems used in digital assets.
BlackRock Warns of Theoretical Quantum Technology Risks to Bitcoin Security
In the filing, the asset manager warns that future developments in quantum computing could undermine the security framework supporting Bitcoin.
If quantum technology develops far beyond its current state, it could render the encryption algorithms used by Bitcoin obsolete.
This could allow bad actors to exploit vulnerabilities, including unauthorized access to Bitcoin wallets for the trust or its investors.
Although quantum computers are still developing, BlackRock emphasizes that the full capabilities of this technology remain uncertain.
However, the company believes that disclosing any theoretical threats that could affect the performance or security of its cryptocurrency investment products is important.
Bloomberg's ETF analyst, James Seyffart, said the update is a significant and standard factor in ETF filings. He explained that issuers typically list all potential threats, no matter how remote.
"To be clear. These are just basic risk disclosures. They will highlight anything that could potentially go wrong with any product they list or the underlying asset being invested in. This is completely standard. And frankly, it's entirely reasonable," Seyffart added.
Notably, BlackRock's filing also addresses concerns about legal actions, energy consumption, mining concentration in China, network branches, and previous market events like the FTX collapse.
BlackRock's IBIT flow. Source: SoSoValueDespite these warnings, IBIT remains the largest spot Bitcoin ETF in the market. It has recorded 19 consecutive days of inflows, attracting over $5.1 billion during the reporting period.
Ethereum ETF Filing Adds In-Kind Redemption Structure
In a separate filing, Seyffart revealed that BlackRock has also modified its S-1 for its spot Ethereum ETF.
The new version includes a plan to support creation and redemption in-kind—a model that allows investors to directly exchange ETF shares for Ethereum, instead of using cash.
This structure could reduce transaction costs and decrease market friction. It also avoids converting cryptocurrencies to fiat currency, which is currently required in the cash-based model. This approach could help issuers minimize slippage and save transaction fees.
The SEC has not yet approved in-kind redemption models for cryptocurrency ETFs, but analysts expect progress this year.
"Eric Balchunas & I expect the SEC to approve in-kind at some point this year... Notably, the first filing for any Ethereum ETF allowing in-kind creation/redemption has a final deadline around ~11/10/2025," Seyffart noted.
BlackRock's filing came after the company's meeting with the U.S. Securities and Exchange Commission (SEC) to discuss cryptocurrency ETF staking and securities tokenization.
