If you think anything is out of the ordinary when one of the world’s most prestigious financial institutions demands a cryptocurrency investment product during a harsh regulatory crackdown, you wouldn’t be alone.
BlackRock, which manages $9.5 trillion in assets, shook up the crypto world yesterday when it applied to the United States Securities and Exchange Commission for a Bitcoin Exchange Traded Fund (ETF). Although the product is technically a trust, as several eagle-eyed observers on Crypto Twitter have pointed out, it is functionally identical to a real blue ETF, according to experts.
It’s the ‘real deal’, says senior ETF analyst at Bloomberg Eric Balchunas, who defended the “ETF” label yesterday on Twitter. Balchunas also pointed out that BlackRock is nearly unbeaten against the SEC at 575-1, with nearly every one of its ETF apps receiving the Commission’s blessing. Other Bitcoin ETF contenders over the years cannot say the same.
Many investment firms have applied for a Bitcoin ETF since 2013, to face rejection from Wall Street’s top regulator, who cites concerns about market manipulation as reasons for not allowing such a product to exist in the United States. . An ETF is an investment vehicle that tracks the value of an underlying asset, such as gold, foreign currencies or Bitcoin.
Asset managers VanEck, Ark Invest and Bitwise have all been rejected by the regulator. The issue is so controversial, Grayscale Investments last year to hit the SEC with a lawsuit after saying “no” to his request to convert his Grayscale Bitcoin Trust (GBTC) into an ETF.
But BlackRock application is different – and it comes at a strange time: the SEC has stepped up a fierce crackdown on the digital asset industry this year, hitting crypto firms with trial after trial and even hint that space is not at all welcome on American shores.
BlackRock, however, is no ordinary investment manager, it’s the largest in the world. Not only that, he wants to work with Coinbase as a custodian (a company that BlackRock has work with Before). The SEC last week for follow-up the San Francisco-based exchange for allegedly offering and selling unregistered securities through its staking service.
“I would say it’s a complete shock,” Balchunas said. Decryptadding that BlackRock’s decision “definitely breathed new life into the whole Bitcoin ETF race and new optimism.”
He went on to say that while he hasn’t seen anything to indicate that the SEC has changed its position, the fact that BlackRock is postulating makes this situation different.
“It’s just that it’s BlackRock – that should give some hope, that’s for sure,” he said.
BlackRock is a serious institution. And the request says that Bank of New York Mellon would be the custodian of the cash holdings of the Trust – another reputable financial institution. According in Balchunas, BlackRock has been very successful in the past in getting ETFs approved.
“BlackRock is such an awesome, powerful, big and connected company,” Balchunas added. “And for them to see something here, I have to give them a lot, I just give them a lot of respect. And so that’s where I am, do they know something? What do they see?
The debate on Twitter about how BlackRock’s product, if approved, should be labeled is much ado about nothing, Balchunas said. He points out that the application indicates that the product would be a grantor trust, which would make its structure similar to GLD Gold Trust, which everyone thinks of as an ETF.
“You can try to be technical, but we’re fine with just calling it an ETF, because that’s really in the spirit of the ETF or the structure. It really qualifies as an ETF,” he said.
Is BlackRock finally the one bringing Bitcoin into the big ball? The current regulatory environment may prove difficult to manage, but the Wall Street giant certainly has the best chance yet.