How BlackRock wants to establish the first Bitcoin Spot ETF in the USA
BlackRock wants to establish the first Bitcoin Spot ETF in the USA. Some experts are convinced that an allegedly new methodology of the largest wealth manager in the world will lead to success. Another observer is meanwhile certain that the hoped-for funds will not be forthcoming.
How BlackRock wants to establish the first Bitcoin Spot ETF in the USA
BlackRock wants to establish the first Bitcoin Spot ETF in the USA. With this aim, the well-known investment company submitted an application to the competent supervisory authority SEC on June 15 for the first time in cooperation with NASDAQ.
It was by no means the first application of its kind. Financial companies have repeatedly submitted applications for a Bitcoin Spot ETF for several years – so far all without success. Only exchange-traded funds that invest in futures contracts have been successful with the SEC. The largest of its kind in the US is the ProShares Bitcoin Strategy ETF (BITO) .
BlackRock’s proposal was considered promising. Not only did he use a new principle, but the brand name alone was seen by many investors as a guarantee of success. However, last Friday, June 30, the SEC also rejected BlackRock’s application – and a number of imitators, such as Invesco and Fidelity.
BlackRock followed suit yesterday after Fidelity filed a new, amended filing with the SEC, Reuters reports .
The new principle, with which the largest asset manager in the world pioneered, will be retained. It will also be expanded to include details required by the SEC. BlackRock wants to enter into a surveillance agreement with the New York Stock Exchange NASDAQ.
The latest application also states that it wants to use the crypto exchange Coinbase as a partner for the acquisition of Bitcoin. Experts suspected this cooperation. The same pattern is found in Fidelity’s motion.
What are the odds of BlackRock’s latest filing being successful?
Given that the SEC has denied dozens of filings over the past few years, BlackRock’s latest filing has a chance of success. The fact is that the SEC recently criticized the lack of clarity. The asset manager’s description of how exactly the Bitcoin Spot ETF should be operated was incomplete.
The US authorities used the same reasoning in relation to all previous applications. Specifically, the applicants are accused of not being able to explain how fraud and manipulation can be prevented in the context of the provision of the ETF.
The SEC officially fears that the way cryptocurrencies work could lead to deception by financial firms. So BlackRock and Co. would supposedly be able to sell ETFs that are not covered as promised.
A partnership with another independent company like Coinbase could solve this problem. Coinbase could then serve as a custodian of the cryptocurrency, ensuring that sufficient funds are available.
It is not yet clear whether the SEC will comply with this or a similar principle. Financial expert John Paul Koning is already convinced that all new applications will also be rejected. Koning sees the success of a Bitcoin Spot ETF inevitably linked to the state of Binance.
Why the iShares Bitcoin ETF is unsuccessful
The SEC is not interested in approving the exchange-traded fund “iShares Bitcoin ETF” as long as Binance can conduct an active business, according to the financial expert. The same applies to any similar product.
“There will be no Bitcoin Spot ETF! At least not until Binance bites the dust,” the author recently headlined. “If one wanted to manipulate the Bitcoin price using futures trading, one could probably do that very well through the Binance futures market, so Blackrock’s monitoring-sharing arrangement with the CME would not be very effective.” Explains Koning .
The CME is a futures exchange regulated by financial authorities in the United States. A surveillance income could therefore theoretically satisfy the SEC. Coinbase alone as a second eye should not be sufficient as an unregulated entity.
Koning also does not believe in success because he cannot see anything special in BlackRock’s applications. This precise approach has been used countless times since 2018. They were always unsuccessful.
“No Bitcoin Spot ETF has won over the SEC, and it doesn’t appear why Blackrock is anything special.” For a Bitcoin Spot ETF to be successful, the crypto industry must change significantly.
“In my opinion, the unregulated offshore market must die, because only then will much of the bitcoin trade migrate to venues that meet both the SEC’s “regulated” and “significant” requirements.” Writes King.
Among the offshore markets, Binance is the largest, but there are a few other players as well. If this requirement is actually realistic, the exchange-traded Bitcoin Fund should remain an idea.
