Late last week, Blackstone Group, the world’s largest asset manager, surprised many by filing for a Bitcoin exchange-traded fund (ETF).
Blackstone Group’s filing for a spot Bitcoin exchange-traded fund (ETF) is one of the most important news of 2023 so far.
This proposed Bitcoin ETF is different from the dozens of ETFs that the U.S. Securities and Exchange Commission (SEC) has previously rejected.
There are strong arguments for and against the SEC’s approval of this proposed ETF.
If the SEC approves it before the end of the year, the price of Bitcoin will surge by at least 30-50%.
The SEC has 45 days to make a decision (i.e. approve, reject or postpone the decision). If the SEC uses all of the postponement time, the decision will be made in February.
The U.S. Securities and Exchange Commission (SEC) has never approved a spot Bitcoin exchange-traded fund (ETF). Considering that the United States has the strongest capital market in the world, approving a spot Bitcoin ETF would be of great significance. This would further legitimize Bitcoin as an asset and make it more convenient to invest in, among other things.
The SEC has rejected dozens of proposed bitcoin ETFs since the Winklevoss brothers filed their first application in 2013.
There has been some progress in 2021, when the SEC approved the first Bitcoin futures ETF. However, unlike spot ETFs, issuers of futures ETFs hold futures contracts.
That is, no matter how popular a futures ETF becomes, it will not have an impact on the demand for Bitcoin. For a spot ETF, when the demand for the ETF increases, the issuer must continue to buy "actual" Bitcoin.
Why Blackstone's proposed ETF is different
First, the most significant difference is that Blackstone is proposing a spot Bitcoin ETF. While other well-known asset and fund management firms (such as VanEck, Fidelity) have filed for Bitcoin ETFs in the past without success, Blackstone is arguably in a league of its own due to its size and political influence.
Second, BlackRock is the first to introduce a surveillance sharing agreement in its proposed Bitcoin ETF. A surveillance sharing agreement allows certain entities to share information about trading, clearing, and customer identification. This is important because the SEC has cited concerns about market manipulation in the past when rejecting proposed spot Bitcoin ETFs.
Blackstone Group sees the long-term potential of Bitcoin and therefore wants to submit an ETF application now, hoping that the SEC will approve it when the bull market returns.
