BTC ETFs Ready to Shake the Markets? If there is one news that will be followed closely this end of the year, it is this one. There DRY (Securities Exchange Commission) and its boss, Gary Genslerwill they accept bitcoin spot ETF applications of BlackRock and company? Let’s go for a foray into the heart of this fascinating subject in order to try to determine the outcome before anyone else.
When BlackRock sets fire to the powder
On Thursday, June 15, 2023, the largest investment fund in the world, BlackRock, made a sensational entry into the crypto sphere. His boss, Larry Finkdrops a bitcoin spot ETF application with the SEC, the American regulator. The magnitude of this announcement is not to be taken lightly, because BlackRock is more than $10 trillion in assets under management and immeasurable influence within the financial sphere. Clearly, it is he who makes the rain and the good weather on the markets. So when Larry Fink announces that Bitcoin and cryptos are “digitizing gold”the impact is resounding.
But first, what is an ETF? It’s a exchange-traded fund. That is to say a exchange traded fund responsible for reflecting the price of a tangible asset. In this case, bitcoin. It is therefore a simple, easy to access and regulated way to allow traditional finance to expose itself to the bitcoin price.
You will tell me: nothing new under the sun. Bitcoin ETFs already exist. Admittedly, the Bitcoin ETFs future are already in service since the end of 2017. But the novelty here is that BlackRock’s request concerns a Bitcoin ETFs “spot”, or more precisely a NASDAQ-listed trust. And that makes all the difference.
On the one hand, because the approval of such an ETF would definitively seal the acceptance of bitcoin within traditional finance. On the other hand, it requires BlackRock to actually buy the BTCs in order to be able to offer them to its customers. Crypto investors of all stripes are therefore impatiently awaiting the arrival of this potential financial windfall on the “small” Bitcoin market.
Bitcoin Spot ETF Demands: Dates to Watch
In the wake of this announcement, many management funds BlackRock competitors have precipitated following him into the breach so that they, too, can claim their own ETF. ARK, Bitwise, VanEck, Wisdomtree, Fidelity or Valkyrie… Now the ETF race is triggered. It’s the game of who will be the first to have their ETF application accepted. Indeed, the lucky winner will take a definite step ahead of the competition, attracting the first capital to him.
Fact, the SEC agenda will be busy over the next few months, with many deadlines to which their response, acceptance, postponement or refusal, will be expected.
There first deadline was between September 2 and 4 2023. For this one, the SEC has already rendered its verdict and postponed its decision for all the applications.
THE next dates are then distributed between October 2023 and March 2024. Of October 16 to 19 2023 for the second. Of January 14 to 17, 2024 for the third. Finally, from March 14 to 19 for the last. On that date, the SEC must render its final decision on the matter.
We also notice on the chart that Cathie Wood’s Bitcoin spot ETF demand, ARK Investeven has an ultimate deadline from January 10, 2024. It seems difficult for the SEC to refuse ARK’s application in January to accept BlackRock’s application two months later. It is therefore possible that the regulator will decide before this deadline. Not to mention that the BlackRock giant should do everything to see its request accepted first.
Could we be heading for a response from the SEC as early as the end of 2023 rather than in 2024? This is what we will try to determine right after.
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Grayscale affair: the SEC at an impasse?
Indeed, new elements have just arisen in this news filled with suspense. And these relate to the Grayscale Trust and his GBTC. To go back a little, the company is waging a long-term fight against the American regulator, because it has long wanted to see its Trust converted into an ETF, like that of BlackRock.
Grayscale has been fighting since October 2021 to make this transformation. Except that the company had hitherto faced a frank and massive refusal from Gary Gensler. However ! Turnaround on August 29th. The federal court ruled on the litigation between Grayscale and the SEC. The judge sided with Grayscale, rejecting the regulator’s arguments as a whole. And this decision will have a decisive impact on the future of ETF applications.
Now Bloomberg analysts are announcing a 75% chance that a spot Bitcoin ETF will be accepted in 2023. But why?
First, this decision invalidates all the arguments put forward by the SEC until then. It must therefore find new ones to prohibit the creation of Grayscale’s Bitcoin spot ETF. The second important data is the deadline given by the court to the SEC provide an answer: 45 days. The clock is turning. The SEC must by then come back with new arguments or it will be forced to accept the ETF.
But what about other ETF applications in progress? Will the giant BlackRock wisely allow itself to be snatched the limelight by Grayscale? The SEC, because of this lost lawsuit, must find other valid arguments for refusal, otherwise it will lose all credibility.
What choices does the SEC have left?
Investors then begin to hope. First thanks to Grayscale. But also, because BlackRockthroughout its history, has suffered onlyone and only refusal from the SEC regarding its ETF applications.
Jay Claytonformer director of the SEC has also expressed on the subject on CNBC :
” If [BlackRock] succeeds in demonstrating that the market spot [de Bitcoin] is of similar efficiency to the market for futureit will be hard not to endorse the ETF [spot] Bitcoin. »
Clearly, the DRY could only have three choices possible:
- It accepts the decision of the Federal Court of Appeals and in this case, the first Bitcoin spot ETF, that of Grayscale, must be approved within 45 days;
- The SEC is appealing the court decision, except that it will have to find a concrete justification for it;
- The SEC takes advantage of the 45-day period granted to it to accept by then another request for a Bitcoin spot ETF before that of Grayscale… randomly, that of BlackRock.
If the first or third option occurs, then we will see acceptance of a Bitcoin Spot ETF within the next 45 days. That is to say by next October.
Coinbase: the weak link in Bitcoin spot ETFs?
If we dwell on theoptional 2that of an unprecedented new argument brought by the SEC, we could possibly see a potentially exploitable “flaw” by the regulator. Indeed, the strategic partner of all these large funds for the conservation of bitcoins is none other than the exchange. Coinbase.
Admittedly, the crypto-exchange has always tried to work in concert with regulators for years. However, since this summer, Brian Armstrong’s exchange is not more in the smell of holiness with Gary Gensler.
Attacked from all sides by the regulator, Coinbase, through the voice of its boss, demands clear answers from Gary Gensler on its crypto policy. Answers that the latter refuses to give. Therefore, the total blur still reigns over the regulation crypto exchanges. An argument that the SEC could make in order to support its refusal (or postponement) of its decision with regard to ETFs.
Either way, all the attention around spot Bitcoin ETFs shows one thing no matter what the SEC decides: thefinal foray of the traditional actors in this sector. Crypto is the future, and the bosses of old finance are trying to turn the corner. This enthusiasm, against a backdrop of the emergence of tokenization, and Bitcoin halving approach could have an explosive cocktail of action in store for us in 2024.
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