Asset managers Bitwise and BlackRock have recently submitted updated filings to securities regulators for their respective spot Bitcoin exchange-traded funds (ETFs). These filings address concerns raised by the U.S. Securities and Exchange Commission (SEC) in recent discussions with ETF applicants. Bloomberg ETF analyst Eric Balchunas predicts a favorable outcome, with a 90% chance of approval for prospective spot Bitcoin ETFs by January 10, 2024. This article explores the significance of these filings and the potential impact on the cryptocurrency market.
The submission of updated filings by Bitwise and BlackRock signals the growing interest and momentum around Bitcoin ETFs. While the SEC has previously approved Bitcoin and Ethereum futures ETFs, it has yet to approve a spot Bitcoin ETF in the United States. With at least ten asset managers planning to offer spot Bitcoin ETFs, the market eagerly awaits regulatory approval.
Eric Balchunas, the Bloomberg ETF analyst, believes that the SEC’s recent discussions with ETF applicants will lead to approvals. If approved, spot Bitcoin ETFs would open up new avenues for investors to gain exposure to Bitcoin without directly holding the cryptocurrency. It could attract institutional and retail investors who prefer the familiar structure of ETFs and may result in increased liquidity and price stability for Bitcoin.
One key issue in the discussions between the SEC and ETF applicants is the creation method for ETF shares. Balchunas highlights the debate between in-kind and cash creations and speculates that only cash creates may be initially permitted. In-kind creations would allow participants to transact using Bitcoin, while cash creations would only involve cash transactions. Balchunas speculates that if BlackRock succeeds in convincing the SEC, other issuers may also opt for in-kind creations.
A particular focus of BlackRock’s latest amendment is the consideration of cash and in-kind models for creating ETF shares. The attached presentation suggests that the discussions between BlackRock and the SEC revolve around finding a suitable mechanism that aligns with existing regulations. The amendment may contain changes that address concerns raised during these discussions, potentially paving the way for approval.
If the SEC approves one or many prospective spot Bitcoin ETFs, it could have significant implications for the cryptocurrency market. Institutional investors could allocate funds into ETFs, increasing demand for Bitcoin. The ease of access and regulatory oversight provided by ETFs could attract a wider range of investors who were previously cautious about investing directly in cryptocurrencies. This increased adoption and acceptance could drive Bitcoin’s price and further solidify its role within the financial industry.
The updated filings by Bitwise and BlackRock signal the continued push for spot Bitcoin ETFs and demonstrate a proactive approach in addressing regulatory concerns. If the SEC approves these ETFs, it could revolutionize the accessibility and adoption of Bitcoin in traditional investment portfolios. Only time will tell if the 90% likelihood predicted by Eric Balchunas comes to fruition, but the momentum towards cryptocurrency ETFs is undeniable.