June 23, 2024

Blackrock’s Bitcoin ETF Application Sparks a Flurry of Activity

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The investment giant BlackRock filed for a Bitcoin exchange-traded fund (ETF) on Tuesday, sparking a flurry of activity in the SEC filing arena. Invesco and Wisdom Tree have also filed for Bitcoin ETFs, and other companies are expected to follow suit.

The filing by BlackRock is a significant development, as it is the first time that a major asset manager has filed for a Bitcoin ETF with the actual opportunity to be approved. BlackRock is the world’s largest asset manager, with over $10 trillion in assets under management .

The filing by BlackRock comes after years of speculation about whether the SEC would actually approve a Bitcoin ETF. The SEC has rejected several previous applications for Bitcoin ETFs over the past decade, citing concerns about market manipulation and investor protection.

However, there are signs that the SEC may be more open to approving a Bitcoin ETF now, especially with the mammoth Blackrock knocking on their door. The price of Bitcoin has stabilized in recent months, and there is a growing body of research that suggests that Bitcoin is a legitimate investment. This is something that the financial industry already knew and argued the point about for years.

If the SEC approves a Bitcoin ETF, it would be a major milestone for the cryptocurrency industry. It would make it easier for investors to get exposure to Bitcoin, and it would likely lead to a surge in demand for Bitcoin and other viable cryptocurrencies. It would bring to light Litecoin, Ethereum, Pecu Novus, Bitcoin Cash and the like, this would also bring with it, or should, some regulatory framework for actual tokens built on these layer-1 blockchains.

The first proposal for a Bitcoin ETF was filed in 2013. However, the SEC has rejected all of the proposals that have been filed so far. It has been an uphill battle for institutions to get an approval that would allow retail investors to get exposure to Bitcoin without actually owning it or having a wallet.

The SEC has cited over the years several reasons for rejecting the proposals. One reason is that the SEC is concerned about the potential for market manipulation. The SEC has also been concerned about the lack of regulation in the cryptocurrency market. Bitcoin as well as other layer-1 native coins have stabalized a bit and the SEC should in good conscious lay our a blueprint for digital assets regulation such as other coutnries have proactively been doing, the U.S. should be the cornerstone of such regulation as long as it does not destroy the innovation in the industry.

There are several reasons why the SEC may be more open to approving a Bitcoin ETF now beyond Blackrock puffing their chest out. The price of Bitcoin has stabilized in recent months, the wild swings that we experienced over the years have not raised its head as of late, which is a good thing for the cryptocurrency community. This stability began to show up around the beginning of 2022, so more than enough time to call it stable.

Another reason is that there is a growing body of research that suggests that Bitcoin and other cryptocurrencies are a legitimate investment and asset class. A recent study by Fidelity Investments found that Bitcoin has a low correlation with other asset classes, which makes it a good diversification tool. It is also considered a hedge against inflation not only in the U.S. but globally.

In the end the SEC may be more open to approving a Bitcoin ETF because of the growing demand and the growing pressure not only from major financial institutions but from the general public for Bitcoin and cryptocurrency in general. The number of people who own Bitcoin and other major cryptocurrencies have increased significantly in recent years, which further defines it as a true asset class.

The filing by BlackRock is a significant development, and it is likely to lead to more filings for Bitcoin ETFs. If and let’s just say when the SEC approves a Bitcoin ETF, it would be a major milestone for the cryptocurrency industry. It would make it easier for investors to get exposure to Bitcoin and over time other major cryptocurrencies as they fall into the ETF realm, and it would likely lead to a surge in demand overall.

James Cullen
Technology/Digital Assets Desk

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