The world’s largest asset manager made a massive step towards its involvement in the cryptocurrency industry this week by filing for a Bitcoin Spot ETF with the US Securities and Exchange Commission.
With so many previous applications for such a product by other companies failing before, the community wondered whether BlackRock’s attempt seems doomed from the get-go. However, the behemoth’s success rate with the SEC has been rather unmatched so far.
History to Repeat But for Which Side?
The COVID-19 pandemic, the subsequent central bank monetary policies, and BTC’s price surge in 2020 and 2021 changed the game in a way that very few were brave enough to envision prior to that moment. Numerous institutions started looking more seriously toward the cryptocurrency industry, and BTC in particular.
Back then, it was almost expected that a new institution or individual legacy investor will announce their bitcoin purchase on a weekly basis. BlackRock, despite being hesitant at first, started with minor investments through CME, as well as encouraging comments from some of its executives.
While many institutions backed off during the 2022 bear market, especially in the wake of the loud collapses of the Terra ecosystem and FTX, BlackRock doubled down with a few more initiatives, including a Blockchain ETF in Europe.
In June 2023, though, the behemoth made its largest bet on the industry by filing for a Bitcoin Spot ETF in the States alongside Coinbase, which will be the custodian for the funds.
The move had an immediate positive effect on BTC and its price, which jumped by over $2,000 in the first few days after the filing. The long-term consequences could be even more beneficial for the entire industry should that ETF be approved.
According to Eric Balchunas – Bloomberg’s senior ETF analyst – the chances are quite high, at least historically speaking. BlackRock has a mindblowing success rate when it comes down to its ETF applications with the SEC – 575 approved against just a single rejected one.
Moreover, the Commission reportedly denied that application for an actively managed ETF because it didn’t require the participants to disclose their holdings on a daily basis.
What About BTC ETF in the States?
While the SEC has greenlighted a few Bitcoin Futures ETFs, it has rejected countless Spot ETF applications. In fact, the never-ending denials pushed Grayscale, which tries to convert its flagship BTC product into an exchange-traded fund, to sue the securities regulator.
The agency’s justification has always been the same, claiming that the proposed ETFs fail to demonstrate how they will prevent market manipulation and fraud.
Additionally, the SEC has now gone after multiple crypto exchanges and tokens, alleging that most assets are unregistered securities. Nevertheless, even its skeptic Chair – Gary Gensler – has admitted in the past that BTC is a commodity.
In any case, BlackRock’s timing is quite intriguing, given the SEC’s overall negative stance toward the industry. Being one of the most influential financial players, though, it begs the question of whether BlackRock knows something we don’t that will help it continue with its spectacular success rate or if it will register its second L(oss).
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