The US Securities and Exchange Commission (SEC) confirmed receiving the BlackRock application for spot Bitcoin exchange-traded fund (ETF). The acknowledgment by the regulatory agency signals the start of reviewing the proposal.
The acceptance replicates the acknowledgment issued by Gary Gensler-led SEC to Bitwise application 24 hours earlier.
Recognition of Bitcoin ETF Applications Signals the Review Start
The recognition of BlackRock’s proposal marks the beginning of the official review procedure for the application. Although a preliminary move within the lengthy regulatory journey, it serves great essence for the Bitcoin community. Besides, BlackRock boasts the largest asset under management, estimated to surpass $9 trillion.
The acknowledgment illustrates the readiness of the SEC to explore the proposal for Bitcoin ETF and ascertain its potential market effects. ETFs comprise investment funds that primarily track specific indexes and are tradable on exchanges. Their expansion into the cryptocurrencies scope would mirror the value of a defined digital token or several, thus named cryptocurrency ETF.
The announcement conveyed by the SEC on Friday, July 14, illustrated the start of the review process for the applications submitted by various institutional funds. The regulator recognized receiving proposals from Wisdom Tree Bitcoin Trust and Invesco Galaxy Bitcoin ETF. The review extends to assess the application by Wise Origin Bitcoin Trust and VanEck Bitcoin Trust.
The move illustrates institution managers recognizing increased demand for the regulated investment vehicles that offer exposure to Bitcoin price movement.
Journey to Bringing Bitcoin ETF in the US
The stature of BlackRock within the financial investment makes its entry into the crypto ETF a high stake in pursuit of a spot Bitcoin ETF race. The filing submitted by BlackRock features a surveillance-sharing agreement it entered with the crypto exchange Coinbase.
BlackRock’s pursuit of Bitcoin ETF illustrates the growing recognition of cryptos and likely integration within the conventional financial sector.
BlackRock has found itself within a race of asset managers and crypto companies vying for the initial Bitcoin ETF in the US. The high number of applications portrays the crypto industry positively during regulatory backlash citing noncompliance.
Will the SEC Approve Bitcoin ETF Applications?
The presence of multiple filings presents a huge opportunity for approval. Also, various applications harbor diverse approaches that would offer broader knowledge SEC would deploy when assessing the viability of each proposal. The diversity provides an informative basis for SEC to facilitate solutions to address potential concerns.
The SEC has repeatedly disapproved of Spot Bitcoin ETFs since 2017. Gemini’s Winklevoss twins’ claim submitted an earlier version in 2013. A similar application has seen Grayscale Bitcoin Trust embroiled in an endless legal battle with the SEC.
Procrypto ETFs advocates decry the continued refusal by the SEC to approve the crypto ETFs. Recently, the SEC cited the need for a mechanism to avert price manipulation and fraud. During a Monday, July 10 CNBC interview, former SEC chair Jay Clayton admitted that the proof of satisfying the conditions and guarantee of matching futures market efficacy would lead to ETF approval.
The approval of any pending applications would propel the United States to Canadian levels. Canada is among the few developed economies with a financial product- crypto ETF. In particular, Purpose Bitcoin, CI Galaxy Bitcoin, and 3iQ CoinShares are the three funds with direct investment in spot Bitcoin ETF.
Importance of Comprehensive Evaluation of Bitcoin ETF Applications
The SEC should comprehensively evaluate the nature of the applicant’s regulatory compliance. Also, a detailed evaluation of the applicant’s investor protection and market liquidity is necessary. Also, the SEC should extend the scope of reviewing BlackRock’s application materials relative to viable perspectives.
Despite the regulatory challenges applicants confront, approving the physically-backed Bitcoin ETF would be a critical catalyst to expedite the development of the crypto industry. Besides, it would legitimize crypto products for integration into the traditional financial sector. Lastly, approval of Bitcoin ETF applications would offer investors broader choices to generate more liquidity and stability in the financial market.
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