575 to 1 with the SEC. Will Their Bitcoin Application Follow Suit?

• Investment giant BlackRock has lodged a Bitcoin Spot ETF application with the US Securities and Exchange Commission (SEC), stirring interest within the crypto community.
• Despite many failed attempts by other companies, BlackRock’s exceptional record with the SEC—575 approved ETFs against one rejection—prompts speculation about the possible success of this application.

BlackRock, the world’s largest asset manager, recently announced its foray into the cryptocurrency realm by applying for a Bitcoin Spot ETF with the US Securities and Exchange Commission (SEC). Given the SEC’s history of rejecting similar applications, BlackRock’s move has sparked considerable speculation and intrigue within the industry. However, given BlackRock’s unparallelled success rate with the SEC, its chances could be more promising than initially thought.

The landscape of cryptocurrency and Bitcoin (BTC) underwent a significant transformation following the COVID-19 pandemic, subsequent central bank monetary policies, and BTC’s price escalation in 2020 and 2021. This shift led many institutions, initially reticent, to show increased interest in the crypto sphere, including BlackRock, which started with minor investments through CME and optimistic comments from its executives.

BlackRock, showing resilience during the 2022 bear market, despite the high-profile collapses of the Terra ecosystem and FTX, ventured deeper into the industry with several initiatives, including a Blockchain ETF in Europe. The latest stride in June 2023 involves the application for a Bitcoin Spot ETF in the States, in collaboration with Coinbase as the fund custodian.

BlackRock’s announcement had an immediate, positive impact on BTC, with its price jumping over $2,000 within days following the filing. If approved, the long-term effects could potentially be even more beneficial for the entire crypto industry. Based on BlackRock’s history with the SEC, Bloomberg’s senior ETF analyst, Eric Balchunas, suggests the chances of approval could be promising. With a record of 575 approved ETFs versus one rejection, BlackRock’s success rate is indeed impressive. The lone rejection reportedly came from a failure to mandate daily disclosure of holdings by participants in an actively managed ETF.

The SEC, while approving a few Bitcoin Futures ETFs, has repeatedly rejected Spot ETF applications, citing failure to demonstrate prevention of market manipulation and fraud. This persistent refusal has even led Grayscale to sue the securities regulator. Despite this generally negative stance, it’s worth noting that even the SEC’s skeptical Chair, Gary Gensler, has recognized BTC as a commodity.

BlackRock’s decision to apply for a Bitcoin Spot ETF during this time of uncertainty with the SEC’s approach toward the industry raises many questions. As one of the most influential financial entities, BlackRock’s latest move may suggest a hopeful turning point for the crypto industry, potentially upholding its success streak, or it might mark its second loss with the SEC.