Blackrock the world’s largest money manager and issuer of Exchange-traded funds (ETFs) filed an application for a spot Bitcoin ETF in June. The approval process is still SEC pending but will likely launch by January 10th and make it a lot easier for non-native crypto investors to invest.
Given the progress made in blockchain technology in recent years, there have been unprecedented levels of engagement by institutions and major banks with Bitcoin. Clients of financial advisors are hearing about the news and often ask:
What is Bitcoin? Should I buy some? Where do I buy?
77% of financial advisors have been paying close attention and anxiously waiting for the approval of the ETF so that they can provide the product to their clients.
Industry data says only 12% of financial advisors are recommending Bitcoin to their clients. Of which, they are only allocating 1–4% of their assets after going through all the hassle and headache. As a result, most firms and financial advisors do not believe it is not worth their time.
On the other hand, 47% of advisors personally own Bitcoin. This indicates they understand the innovative technology and the potential the asset has to deliver investment returns.
Advisors are therefore dealing with conflict of: I own it, but cannot recommend or offer it.
Bitcoin ETF is a solution. Advisors are eagerly waiting for the approval spot Bitcoin ETF.
ETFs will increase Bitcoin accessibility to interested investors. Everybody is familiar with ETFs as they are one of the most popular investment vehicles that are low-cost, highly liquid, and more importantly transparent.
Once approved, compliance officers and advisors at firms will have less hesitancy in offering the product to their clients as the security is like any other ETF offered. Just as investors would buy ETFs focused on oil, emerging tech, or real estate, this one will simply be an investment in blockchain and digital assets. Investors will no longer have to navigate to a separate exchange and learn its complexities. Instead, they can do so with their current advisor and brokerage accounts they are familiar with such as Robinhood, Charles Schwab, and Merill Lynch, where their current assets are.
Bitcoin will be entering new territory in the coming months. Will you be an investor or are you already a Bitcoin investor? Love to hear your thoughts on the Bitcoin ETF below!
BlackRock’s Big Shift
Within this context, BlackRock’s 3rd strategic revision of its Bitcoin ETF proposal emerges as a breaking point. Notably, the updated model aims to simplify participation for influential entities like JPMorgan and Goldman Sachs, enabling them to access the ETF using cash rather than handling cryptocurrencies directly. This bold move is a response to regulatory hurdles preventing these institutions from holding Bitcoin directly on their balance sheets.
Banks have it easier now!
Under the revamped model, BlackRock’s ETF proposal streamlines access for banks. Authorized Participants (APs) transfer cash to a broker-dealer, which subsequently converts it into Bitcoin. The digital assets are then securely stored by the ETF’s custody provider, Coinbase Custody in BlackRock’s case.
This bold restructuring aims to mitigate risks for APs while shifting them to market makers, emphasizing BlackRock’s commitment to fortifying investor protection, reducing transaction costs, and enhancing operational efficiency within the Bitcoin ETF ecosystem. Sounds great, right?
The new structure also works by shifting risk away from APs and placing it more in the hands of market makers.
BlackRock said the new model also offers “superior resistance to market manipulation,” which has been one of the primary reasons the SEC has repeatedly denied all prior spot Bitcoin ETF applications.
Additionally, BlackRock claimed the new ETF structure would strengthen investor protections, lower transaction costs, and increase “simplicity and harmonization” across the wider Bitcoin ETF ecosystem.
Countdown to Decision Day
BlackRock’s recent engagements with the SEC, including a third meeting on December 11, underscore the urgency surrounding the forthcoming decision. The SEC faces a crucial deadline to decide on BlackRock’s application by January 15, with a final cut-off on March 15.
The clock is already ticking and Industry analysts eagerly await the SEC’s expected ruling on several spot Bitcoin ETF applications between January 5-10. Should BlackRock receive the green light, it could reshape the crypto landscape, providing a smoother avenue for traditional financial institutions to enter this burgeoning market.
What’s Next for the Industry?
As the world awaits BlackRock’s fate, there’s newfound hope for SEC approval of spot Bitcoin ETFs, potentially transforming the digital assets sector by attracting more retail investors. Until now, market-making firms like Jane Street, Jump Trading, and Virtu were expected to be major participants. But with banks now entering the picture, it could expand the number of liquidity providers. This change might give banks a share in the action.
Delays Might Still Be Possible!
As per schedule, Bitcoin ETFs might get SEC approval by January’s end, but Bloomberg’s ETF analyst James Seyffart suggests a potential delay in their actual listing. Seyffart hints at uncertainty, indicating a possible gap between approval and public listing, extending beyond the initial approval period.
Implication of the potential Bitcoin Spot ETF approval for the BTC price
Today’s market analysis reports highlight significant fluctuations in the cryptocurrency sector. At the time of writing, Bitcoin has momentarily dipped below the $41,000 threshold, resulting in about $500 million in market liquidations this week, and currently shows a decrease of 6.05% in value. For a comprehensive understanding, it’s advisable to examine the Price chart of BTC, which can offer deeper insights into these market trends. Conversely, other cryptocurrencies like BNB are experiencing an uptick, with a 7.02% increase, potentially tied to anticipations discussed in a CNF article regarding Bitcoin ETF approvals. As an investor, it’s advisable to navigate these market dynamics cautiously, weighing the inherent risks against the potential opportunities.
