A spot Bitcoin exchange-traded fund (ETF) could potentially be approved by regulators within the next three to six months, according to a former high-ranking executive from BlackRock. This timeline is shorter than the previous estimate of nine to twelve months. The approval of a spot Bitcoin ETF could lead to an infusion of around $200 billion into Bitcoin investment products in the near term, potentially doubling or tripling the assets under management in current Bitcoin products.
The former BlackRock executive, Steven Schoenfield, expressed optimism about the approach taken by the SEC regarding spot Bitcoin ETF filings. Rather than rejecting them outright, the SEC has chosen to delay the filings and seek comments, signaling a positive shift in dialogue. Schoenfield also referenced the recent Grayscale lawsuit, which the SEC lost, suggesting that this development will likely pave the way for converting the Grayscale Bitcoin Trust into an ETF. Four congressional leaders have also urged the SEC Chair to approve spot Bitcoin ETFs immediately.
BlackRock, along with other traditional finance firms, has filed for a spot Bitcoin ETF with the SEC. However, they are facing delays from the regulatory body. AllianceBernstein, a global asset management company, has predicted that the approval of the BlackRock ETF could result in a growth in crypto asset management of up to $650 billion.
Schoenfield believes that being the first to market may not necessarily give BlackRock a significant competitive advantage. He pointed out that there are other firms deeply committed to tradable digital assets that are closer to the crypto ecosystem than BlackRock and are already working on applications. He anticipates strong competition for BlackRock in this space.
Another former BlackRock director, Martin Bednall, offered a contrasting view, suggesting that BlackRock’s industry prominence and substantial resources could give the company an edge in obtaining approval for the spot Bitcoin ETF.
The SEC has expressed concerns about potential fraud and manipulation on unregulated exchanges where digital tokens are traded, which is why they have not yet approved spot Bitcoin ETFs. However, they do not share the same reservations regarding futures contracts listed on the regulated Chicago Mercantile Exchange. Despite losing a court case to Grayscale, the SEC has maintained its stance. Some speculate that the SEC might retroactively revoke approval for Bitcoin futures ETFs to align its treatment of spot and futures Bitcoin ETFs, but the recent approval of ether futures ETFs seems to dispel that notion.
Prominent asset managers such as BlackRock, Fidelity, Ark Invest, WisdomTree, VanEck, and Valkyrie have pending filings to launch spot Bitcoin ETFs. A senior analyst specializing in global digital assets at Bernstein noted a noticeable shift in the SEC’s stance towards crypto ETFs, with the SEC now being more engaged and responsive to applicants. The analyst anticipates that the first Bitcoin ETFs could receive approval around early January, with spot ether ETFs potentially receiving approval shortly after.
The approval of spot Bitcoin ETFs by the SEC would be a game-changer for the cryptocurrency industry, providing a more accessible way for investors to enter the Bitcoin market. Currently, investing in Bitcoin can be complex and challenging, especially for traditional investors. ETFs would open the doors for a wider range of investors, potentially bringing more mainstream adoption to cryptocurrencies. However, significant hurdles, such as addressing concerns about surveillance-sharing agreements and market manipulation, need to be addressed before spot Bitcoin ETFs can receive regulatory approval.
The involvement of major asset management firms like BlackRock is crucial in shaping the future of spot Bitcoin ETFs. Their support could sway regulators’ decisions. Investor sentiment and demand for Bitcoin ETFs will also play a vital role.
