- BlackRock’s Bitcoin ETF application generates discussions as experts analyze the possibility of approval.
- Out of the 576 ETF applications by BlackRock, SEC has approved 575 and rejected only one.
BlackRock recently joined the likes of Grayscale and Ark Invest to apply for Bitcoin Exchange-Traded Fund, however, some market analysts quickly predicted that it is unlikely that the US Securities and Exchange Commission would approve.
Several applications from other companies have already been rejected, and BlackRock’s application came at a time enforcement action against the Industry is at a high level. Interestingly, a brief look at the company’s ETF record indicates that the odds are in its favor.
According to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, BlackRock has had 575 ETF filings approved by SEC. Only one has been rejected. In this case, he believes that there is a fifty-fifty chance of getting approval. Following the positive talks surrounding this application, WisdomTree, Bitwise and Valkyrie, who have had their applications rejected in the past have refiled hoping for something positive.
Dave Weisberger, chief executive and co-founder of CoinRoutes has also commented that the BlackRock ETF would likely get approval. This has excited a section of the crypto community considering the pedigree of Weisberger. He was one of Morgan Stanley’s Opals products, precursors of ETFs in 1990.
Bryan Armour Thinks BlackRock Knows Something We Do Not
Another reason for this possibility is that BlackRock’s application is said to be a little different from the ones that were rejected.
According to reports, the Nasdaq exchange where the iShares Bitcoin Trust is expected to be listed could go “into a surveillance-sharing agreement with an operator of a United States-based spot trading platform for bitcoin”.
It can be recalled that when SEC rejected Bitwise’s ETF application last year, the Commission clarified that one of the ways an applicant could meet its obligation to prevent fraud and market manipulation is by having a “comprehensive surveillance-sharing agreement with a regulated market of significant size”.
Weisberger observed that several other groups refiling have adopted the trust structure.
BlackRock has done it cleverly by structuring it the same way that GLD and IAU are structured. If it goes to court, the SEC is effectively arguing that there is some fundamental difference between gold, which is designated as a commodity, and bitcoin, which has been designated as a commodity.
Coinbase is said to be the proposed custodian for the fund, however, SEC recently sued the exchange for failing to register as a national security exchange.
Bryan Armour, director of passive strategies research appears to be unconvinced of the trust argument. According to him, there is no reason to believe that SEC would likely change their mind to approve this application unless BlackRock knows something different from what the world already knows. Speaking further on this, he noticed that the only reason why people stay positive about this is BlackRock’s 575-to-1 record. Also, there is a reputational risk that comes with the filing.
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While experts discuss the possibility of the ETF’s approval, crypto investors keep their fingers crossed as SEC’s confirmation could send the Bitcoin price to the moon. Bitcoin is currently trading at $30,316.02 after surging by 3 percent in the last seven days.
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