The U.S. Securities and Exchange Commission (SEC) has postponed its decision on the application of BlackRock, the world’s largest asset manager, for a spot Bitcoin exchange-traded fund (ETF). This is the seventh Bitcoin ETF application that the SEC has delayed on Aug. 31, 2023, amid growing demand and interest from investors.
What is a Bitcoin ETF and why is it important?
A Bitcoin ETF is a type of investment product that tracks the price of Bitcoin and allows investors to buy and sell shares of the fund on a regulated exchange. A Bitcoin ETF would provide investors with exposure to the cryptocurrency market without having to deal with the complexities and risks of buying, storing, and securing Bitcoin directly.
A Bitcoin ETF would also increase the liquidity, transparency, and efficiency of the Bitcoin market, as well as attract more institutional and retail investors to the space. A Bitcoin ETF would also potentially reduce the premium that some investors pay to access Bitcoin through other vehicles, such as trusts or funds.
Why did the SEC delay BlackRock’s Bitcoin ETF application?
BlackRock filed its application for the iShares Bitcoin Trust in June 2023, with Coinbase Custody as the planned custodian of the fund’s Bitcoin holdings and the Bank of New York Mellon as the administrator of its fiat accounts. The iShares Bitcoin Trust aims to offer investors access to Bitcoin markets without having to have direct exposure to BTC itself.
However, the SEC has not yet approved any Bitcoin ETF applications in the U.S., citing concerns over market manipulation, investor protection, custody, valuation, and liquidity. The SEC has repeatedly extended its review periods for various Bitcoin ETF applications, seeking more public comments and information from the applicants.
On Aug. 31, 2023, the SEC announced that it would defer its decision on BlackRock’s Bitcoin ETF application until Oct. 25, 2023, making it the seventh application to receive a delay on that day. The SEC also postponed its decisions on the applications from Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, Bitwise, and VanEck.
What are the chances of a Bitcoin ETF approval in the U.S.?
Despite the delays, some analysts and experts remain optimistic that a Bitcoin ETF approval in the U.S. is inevitable and imminent. They point to the growing adoption and acceptance of Bitcoin by mainstream institutions, regulators, and investors around the world.
For instance, Canada has already approved several Bitcoin ETFs since February 2023, which have attracted significant inflows and trading volumes. Moreover, Grayscale Investments, the largest digital asset manager in the world, recently won a lawsuit against the SEC over its attempt to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. The court ruled that the SEC failed to provide sufficient reasons for denying Grayscale’s application and ordered it to reconsider its decision.