BlackRock Could Change Bitcoin Trading After Years of SEC Failures
An exchange traded fund is an investment vehicle that tracks the performance of a particular index, sector, commodity, or asset. This allows investors to access these assets by trading them on traditional stock exchanges. There are many such products around the world, especially in the USA. But even with such an active ETF market, the Securities Exchange Commission and other regulators have blocked bitcoin ETFs for years. This scenario may change in the coming months.
In 2018, Bitcoin ETFs were in high demand in the Bitcoin market, as explained by Tuur Demester via CoinDesk. It was also one of the biggest failures of businesses seeking his approval. After hitting an all-time high in 2017 and entering a correction phase in 2018, the institutional participation narrative has taken off, as has the need for ETFs.
This year, in June, the well-known global fund and management company Blackrock revealed its cards in this regard. The firm has officially applied for SEC approval for its own bitcoin. A Bitcoin ETF to be managed through the iShares Bitcoin Trust. The Securities and Exchange Commission rejected this first application, as it had done for many years. A month later, BlackRock again, re-filing the application and taking into account the comments of the SEC.
No reason to keep rejecting Bitcoin ETF
For Gabor Gurbach, an advisor to VanEck and Tether, there is no good enough reason to disapprove of Bitcoin ETF. “The SEC has raised concerns about possible market manipulation, custody issues, and the overall maturity of the underlying market,” Gurbach told me in an interview.
Gurbacs knows this firsthand as global investment manager VanEck has an active bid for a Bitcoin ETF. “A Spot Bitcoin ETF represents direct ownership of an underlying asset such as Bitcoin. When you buy a share of a spot ETF, the fund physically acquires the equivalent amount of the asset, providing almost one to one risk, minus fees,” Gurbach said.
The approval of a local U.S. spot ETF could impact the price of bitcoin and the perception of the asset by more traditional investors, while providing a highly regulated investment product that solves all SEC issues.
“First, it could broaden Bitcoin’s investor base by providing a familiar and widely regulated means for individuals and organizations to gain access to Bitcoin. This is likely to increase liquidity and improve pricing. Secondly, it could potentially lead to more active institutional adoption, which in turn could contribute to greater market stability and less price volatility,” Gurbach explained.
There is no way to know when the Spot Bitcoin ETF will pay off, but the scenario is slightly different from what it was in 2018. For example, El Salvador made bitcoin legal tender in 2021, and several companies are already hoarding bitcoin or using it as part of their treasury or investment management.
BlackRock's interest is only part of this new shift, and the approval of his application could change Bitcoin's weight in the financial system forever.