Good day everybody,
I hope you are all having an excellent day, welcome to CryptoGod-1's blog on all things crypto. Today I will be looking at the big news everybody is anxiously awaiting, the announcement of a Bitcoin ETF. I have previously covered ETF's in a posted titled SEC Brands ETF Filings 'Inadequate.' Here I will look more into the applications of the EFT's and their outlook for how Bitcoin and crypto can increase in popularity and demand.
SEC Acknowledges ETF Applications
On Friday the 14th of July 2023 the Securities and Exchange Commission (SEC) noted in an announcement on their website that they have acknowledged the spot Bitcoin ETF applications made by Fidelity, VanEck, WisdomTree, and Invesco. This represents a massive moment in the cryptocurrency industry as more and more companies continue their quest to obtain the rights for a spot Bitcoin Exchange Traded Fund (ETF). A similar acknowledgement was reported for Blackrock, while other companies such as ARK Investment and BitWise have previously received acknowledgments from the regulator.
One thing to understand is that the acknowledgement means a guarantee of the immediate approval or rejection of the applications. The process has always been a slow and tough one, but this is a positive step in the journey as the SEC will now have to enter a period of deliberation, which is estimated to last around 240 days. While deliberating, the regulatory body will have the chance to make a decision on the funds, which will include approving, denying, or postponing an application. The public also have a chance to provide comments on the applications while the SEC deliberates.
The competition between companies vying to be the first to launch a Bitcoin ETF in the United States is considered a positive step in the long term adoption of cryptocurrencies, while the SEC acknowledgements signal that the regulatory body is ready to explore the idea of a spot Bitcoin ETF and assess its potential market effects. In the past the SEC's unwillingness to approve a Bitcoin spot ETF has caused frustration in the space, but this seems to be a step in the right direction.
In the past, one of the biggest issues facing the Bitcoin spot ETF has been the SEC's fear and concern of the susceptibility of Bitcoin's price to manipulation. However, experts believe that investors are keen on accessing such a product because it would enable them to participate in Bitcoin without managing the asset's custody.
Previous applications to the SEC had seen concerns raised, mainly around the ack of clarity in the surveillance-sharing agreements (SSAs) between the asset managers (Fidelity, WisdomTree, VanEck, and Invesco) and the exchanges (Cboe Global Markets or Nasdaq) that would list the ETFs. In an attempt to enhance their application and show their were striving for maintaining market integrity and preventing fraudulent or manipulative trading activities, Cboe and Coinbase collaborated for their ETF application. With the revised applications having been filed, the applications explicitly state their intention to enter a surveillance-sharing agreement with Coinbase to further enhance their ability to ensure no manipulation or fraudulent activity takes place. The efforts made by the asset managers and their partnership with Coinbase demonstrate their commitment to addressing the SEC's concerns and improving the chance of getting approval from the SEC.
BlackRock CEO Larry Fink
The news has seen optimism expressed by the CEO of BlackRock, Larry Fink. He is also optimistic about the rising demand for cryptocurrencies among gold investors. He noted how following the release of BlackRock's second-quarter earnings report that more and more gold investors have been asking about the role of cryptocurrencies over the previous five years. He went on to add that the impact of ETF's helped give access to gold, and the same principle could apply to crypto.
Fink went on to point out how the depreciation of the US dollar in recent months and its appreciation over the past five years shows that an international crypto product could help to provide a hedge against those fluctuations.
"That's why we believe there are great opportunities and why we're seeing more and more interest. And the interest is broad-based and worldwide."
BlackRock's foray into the cryptocurrency market will align with the company's objective of creating user-friendly and cost-effective investment products, according to Fink, who stated:
"We believe we have a responsibility to democratize investing. We've done a great job, and the role of ETFs in the world is transforming investing. And we're only at the beginning of that."
Back in 2017 Fink had showed scepticism for cryptocurrencies, stating that their popularity was purely down to money laundering. However, given the interest shown in crypto from clients, along with the surging value of cryptocurrencies, BlackRock have decided to explore the possibility of entering the market. Fink also stated how the diversification benefits of cryptocurrencies are popular for investor portfolios.
"It has a differentiating value versus other asset classes, but more importantly, because it's so international, it's going to transcend any one currency."
BlackRock have seen their second-quarter results post an adjusted earnings per share of $9.28 on $4.46 billion in revenue, meaning the company is now managing assets over $9 trillion.
Australia & Canada
Meanwhile in Australia the first fully-licensed spot bitcoin ETF under new regulatory guidelines has been filed with the Australian Securities Exchange (ASX). A Bitcoin focused asset management firm named Monochrome, who as part of a partnership with Vasco Trustees, made an announcement on Friday the 14th of July 2023 that they had lodged an updated application for the Monochrome Bitcoin ETF (IBTC) and with it they will intend to provide regulated exposure for retail investors.
The move marks the first time there has been a filing for a spot Bitcoin ETF on the ASX, which will be under a licensing regime featuring crypto provisions, established almost two years ago. In October 2021, ASIC, the country's securities regulator revised its rules for the Australian financial services (AFS) license, and the ASIC has been working to promote market transparency amongst crypto firms while enhancing investor protections.
While the product of a Bitcoin spot ETF is still not available in the United States, the financial product is already available in Canada. There are three significant funds offering the product, with Purpose Bitcoin, 3iQ CoinShares and CI Galaxy Bitcoin approved by the regulator in Canada. With these other nations already offering a Bitcoin spot ETF, it seems it is only a matter of time before the Untied States has their own Bitcoin spot ETF available.
Have a great day.
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