The recent revelation that BlackRock, the world's largest asset manager, has submitted a Bitcoin spot ETF proposal to the US Securities and Exchange Commission (SEC) has sparked both optimism and uncertainty.
Despite the ongoing SEC lawsuit, BlackRock has opted for Coinbase as its custodian and market price data provider. This decision, while seemingly bullish for BTC's price, has left the community pondering the implications of BlackRock's foray into Bitcoin.
For years, a Bitcoin spot ETF has been hailed as the ultimate catalyst to attract substantial new capital for Bitcoin in the US. However, asset managers have faced significant challenges in gaining SEC approval for such ETFs in the past.
So, what are the chances of a BlackRock spot ETF becoming a reality? While future-based ETFs already exist in the US, these don't involve the settlement of actual Bitcoin but are instead settled in cash. In contrast, a spot ETF holds the potential for substantial inflows. Market analyst Joe Consorti from The Bitcoin Layer explains that this could finally unlock the "floodgates for institutional liquidity."
Hence, being the first to secure SEC approval for a spot ETF is a race that everyone wants to win, much like the situation with gold back in 2004. And given its reputation and influence, BlackRock has the "highest likelihood" of any previous attempts to receive approval, as Consorti points out. After all, BlackRock stands as the most powerful and politically well-connected asset manager in the world.
Undoubtedly, the filing of a spot ETF application by BlackRock holds more significance than if it were initiated by the Winklevoss twins or Grayscale. SEC Chairman Gary Gensler, however, finds himself facing an unfavorable situation with the timing of this application.
Rejecting BlackRock's proposal would likely present more challenges for Gensler. Antagonizing BlackRock and inviting further scrutiny due to weak justifications for a Bitcoin ETF denial wouldn't be politically astute for the agency.
BlackRock's collaboration with Coinbase adds an intriguing dynamic that may make Gensler feel uneasy. Nevertheless, a Bitcoin spot ETF application has perhaps never stood a greater chance of "opening" the floodgates to institutional capital.
As for when the SEC will render a decision on the application, the timeline remains unclear. Historically, the SEC has utilized the full 240-day window to deliberate and decide. If this trend continues, a verdict can be expected in mid-February 2024, coincidentally a month before the Bitcoin Halving.