BlackRock’s ETF May Change the Bitcoin Game

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Trade Commission Chairman Gary Gensler speaks during a Senate Agriculture, Nutrition and Forestry Committee hearing on Capitol Hill November 18, 2009 in Washington, DC. The committee called witnesses to talk about the reform of capital markets regulation in the United States. (Photo by Brendan Smialowski/Getty Images)Getty Images

An Exchange Trade Fund is an investment vehicle that tracks the performance of an index, sector, commodity or particular asset. It allows investors to gain exposure to these assets, by trading them on traditional stock exchanges. There are many such products around the world, especially in the United States. But even with this buoyant ETF market, the Security Exchange Commission and other regulators have blocked a bitcoin ETF for years. This scenario may change in the following months.

In 2018, a bitcoin ETF was in high demand in the bitcoin market, as explained by Tuur Demester via CoinDesk. It was also one of the biggest failures of companies seeking its approval. After hitting an all-time high in 2017 and entering a correction phase in 2018, the narrative around institutional participation has become popular, as has the need for an ETF. This never happened, even after big companies like TeslaTSLA or MicroStrategyMSTR entered the market.

This year in June, the well-known global fund and management company Blackrock showed its cards in this regard. The company has formally sought SEC approval for its own BitcoinBTC ETF, which will be managed by iShares Bitcoin Trust. The SEC rejected that first filing, as it has for years. A month later, BlackRockBLK uploaded again, filing the application and taking into account the comments of the SEC.

There is no reason to keep refusing a bitcoin ETF

For Gabor Gurbacs, an advisor at VanEck and TetherUSDT, there are not enough reasons not to endorse a Bitcoin ETF. “The SEC has raised concerns about potential market manipulation, custody issues, and the overall maturity of the underlying market,” Gurbacs told me in an interview.

Gurbacs knows this firsthand as global investment manager VanEck has an active spot Bitcoin ETF application. “A bitcoin spot ETF represents direct ownership of an underlying asset, such as bitcoin. When you buy a share of a spot ETF, the fund physically acquires an equivalent amount of the asset, providing near-person exposure, excluding fees,” Gurbacs detailed.

The approval of a local spot ETF in the United States could impact the price of bitcoin and more traditional investors’ perception of the asset while providing a heavily regulated investment product that addresses all of the SEC’s concerns.

“First, it could broaden Bitcoin’s investor base by providing individuals and institutions with a familiar and broadly regulated way to gain exposure to bitcoin. It would likely increase liquidity and improve price discovery. Second, it could potentially lead to increased institutional adoption, which could, in turn, contribute to greater market stability and lower price volatility,” Gurbacs explained.

There’s no way of knowing when a spot bitcoin ETF will bear, but the scenario is slightly different than it was in 2018. For example, El Salvador made bitcoin legal tender in 2021, and several companies are already accumulating bitcoin or using it as part of their cash flow or investment management.

BlackRock’s interest is only part of this new shift, and its app approval may change the Bitcoin game forever.

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I am a Bitcoin researcher, writer and translator from Venezuela. I provide PR and marketing services to Bitfinex and Tether for Latam. I hold and use modest amounts of BTC and USDT.

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