- The ETF definition can address many things
- BlackRock‘s approach may be different from Grayscale’s.
- BlackRock filed its application at a peculiar time for the SEC
- Will it be successful or will it be rejected like its predecessors?
The request for a spot Bitcoin ETF introduced this week by BlackRock has generated mixed reactions among digital currency enthusiasts and investors, especially due to the position taken by the Securities and Exchange Commission (SEC) against this type of financial products. Therefore, the question remains as to whether this initiative will see the green light, or on the contrary, it will end up being rejected, as has already happened with many others raised by recognized entities.
Faced with this doubt, an analysis presented by the CoinDesk medium alleges that the perspective with which BlackRock could approach a Bitcoin ETF would be somewhat different from the approach that other participants have raised, especially comparing with Grayscale, which he tried to make of his Grayscale Bitcoin Trust (GBTC) a product that could be traded on the US stock exchange.
A different approach
Faced with BlackRock‘s proposal, the experts and analysts consulted by CoinDesk argue that the name and other details present in the request somewhat set the tone of what the giant financial asset manager could be proposing, and propose that it would combine elements raised by Grayscale and other more classic seen in already rejected proposals.
In this regard, the editor of Crypto is Macro Now, Noelle Acheson, argued that the terminology of an ETF can be quite complex, but this could derive a certain degree of freedom to deviate a bit from the conventional. She proposes that BlackRock‘s iShares is a bit different from the GBTC since there would be no exchange mechanisms like the ones the latter manages.
Instead, The Bitcoin Layer analyst Joe Consorti put forward the idea that the product in question could also go along the lines of “buying Bitcoin at the end of each trading day to align the fund’s assets with its price.” negotiation”, although this is not something that is usually done with trust.
The fact is that BlackRock raises a Bitcoin ETF, and this means that the trust’s investors will have indirect exposure to the digital currency since they will not have to deal with the custody of the BTC funds, but their profits will vary depending on the price of the main digital currency according to the index used to monitor its price.
The SEC does not seem to agree with Bitcoin ETFs
Although there are still certain details to clarify regarding BlackRock’s proposal, the truth is that the reputable company will face a challenge that important companies have not been able to overcome, and it has to do with the approval of the SEC to see if this product will hit the local stock market.
At press time, the SEC rejected each and every proposal introduced to launch a Bitcoin ETF. In this matter there have been applicants such as Galaxy Digital, VanEck, Fidelity, Grayscale, Ark Invest, WisdomTree and many others, but they have all given the same negative response, alluding to possible risks of market manipulation and concerns with the volatility seen in the digital currency price.
However, the SEC‘s refusal has been criticized even among its own representatives. An example of this is the statements by the agency’s commissioner, Hester Peirce (Crypto Mom), who maintains that the agency does not have clear reasons for rejecting a Bitcoin ETF, and that the decision seems more driven by the refusal toward these assets than by reasons much more goals.
The claims against the SEC have multiplied in these months, since the agency has been promoting compliance actions against important and reputable entities in the US-based crypto sector. Among these, Kraken, Bittrex, Paxos, and recently the platforms stand out. Coinbase and Binance following complaints about alleged violations of federal securities laws.
A different result?
Despite the odds going against it, BlackRock still filed its application for a Bitcoin ETF at this very moment. But the question that many ask is: Will he be able to succeed?
At the moment it is too early to answer that question, but those who closely follow the market have positive expectations for the following reasons:
- BlackRock is the most reputable and most capitalized company in the management of financial assets. Therefore, the fact that they want to launch a Bitcoin ETF implies that they have already examined all the possibilities and scenarios that may come to pass, and they consider that this could be a propitious moment for it.
- Despite the fact that the SEC seems to have something against cryptocurrencies, at the moment it is being harshly questioned even by members of the US congress. Many analysts theorize that the regulator’s stance will end up driving the crypto sector away from the country, which could be detrimental if what you want is to occupy a strategic place for the future of the economy based on digital currencies.
- For two years now, the SEC has been in a court battle against Ripple Labs for allegedly trading unregistered securities referring to XRP. The process seems to be nearing its end, and the victories achieved by the company throughout the trial seem to tip the scales in its favor.
- The SEC will also have to deal with Coinbase and Binance in court, entities that they assured will fight legally to defend the legitimacy of their operations.
For now, BlackRock will have to wait for the regulator’s response, and many believe the verdict could be delayed for as long as possible until an official response is due.
