BlackRock warns about the threat from quantum computers in its Bitcoin ETF risk disclosure.

BlackRock has updated the S-1 registration for the iShares Bitcoin Trust (IBIT), introducing new language that outlines the potential risks posed by quantum computers.

This amendment, submitted on May 9, 2025, reflects the growing awareness in the industry of how advanced computing technologies can impact the encryption systems used in digital assets.

BlackRock warns of theoretical risks from quantum technology to Bitcoin security

In the document, the asset manager warns that future developments in quantum computing could weaken 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 malicious actors to exploit vulnerabilities, including unauthorized access to the Bitcoin wallet for the trust fund or its investors.

Although quantum computers are still under development, BlackRock emphasizes that the full potential of this technology remains 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, stated that the update is an important factor and a standard in ETF filings. He explained that issuers often list all potential risks, no matter how remote they may be.

“To be clear. These are just basic risk disclosures. They will highlight anything that could go wrong with any products they list or the underlying assets being invested in. This is completely standard. And to be honest, this is perfectly reasonable,” Seyffart added.

Notably, BlackRock’s filing also mentions concerns regarding legal actions, energy consumption, mining concentration in China, network forks, and previous market events such as the collapse of FTX.

Despite 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 USD during the reporting period.

Ethereum ETF profile adds physical redemption structure

In a private filing, Seyffart revealed that BlackRock has also amended its S-1 application for its spot Ethereum ETF.

The new version includes a support plan for creating and exchanging funds in physical form—a model that allows investors to directly exchange ETF shares for Ethereum, instead of using cash.

This structure can reduce transaction costs and decrease market friction. It also avoids the conversion of cryptocurrencies into fiat money, which is currently required by the cash-based model. This approach can help issuers minimize slippage and save on transaction fees.

The SEC has not yet approved physical commodity exchange models for cryptocurrency ETFs, but analysts expect progress this year.

“Eric Balchunas & I expect the SEC will approve a spot ETF at some point this year… Notably, the first application for any Ethereum ETF allowing for the creation/redemption of shares in a spot format has a final deadline around ~10/11/2025,” Seyffart noted.

BlackRock’s filing was made after the company’s meeting with the (SEC) to discuss cryptocurrency staking ETFs and the tokenization of securities.

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