With traditional finance (TradFi) entering the crypto market with ETF offerings, Bernstein thinks it would be a significant shift for the industry. However, the Securities and Exchange Commission hasn’t approved any spot Bitcoin exchange-traded fund (ETF) request. If approved, it would open gates for retail and other institutional inflow.
Bitcoin ETF and How They Would Change the Demographic?
Market analysts are expecting positive results from these spot Bitcoin ETFs. As significant global asset managers like BlackRock enter the race, the probability of getting approval from the SEC is high. These would even circumvent the regulatory objection of the financial watchdog.
Bernstein even expects that the market size of these spot Bitcoin ETFs could reach about 10% of BTC’s market cap in two to three years of approval. The reason behind this massive growth might be a strong brand marketing push from the global asset managers. Along with distribution push from financial advisors and retail brokers.
He also says that the new capital in the market to fuel the next crypto cycle would come from a fresh supply of stablecoins and tokenization of traditional assets. Also, ETFs and -the native crypto infrastructure tokenization would greatly help. Spot Bitcoin ETFs would provide exposure to BTC more simply and cheaply. Something that everyone is looking for.
Also, the upcoming spot ETF market would bring massive capital to the industry. This liquidity helps fund innovations and strengthen existing ones. The scenario nearly bridges the gap between decentralized finance (DeFi), Crypto, and TradFi.
The Current Approval Scenario of Spot ETF Applications
The financial watchdog of the United States is yet to approve any request, but experts argue that the agency would approve multiple requests simultaneously. In July 2023, the SEC found some issues with the ETF requests of BlackRock and Fidelity, and others were asked to refile.
Customarily the agency takes 15 days to file a public commentary. In the meantime, the filing can be returned for refiling till the seventh day. After the closing window o 15 days, the financial watchdog gets 240 days to decide; they can either approve or reject the filing.
On July 13, 2023, the SEC accepted BlackRock’s spot ETF request while acknowledging a similar request from Bitwise a day earlier. The application was officially published in the SEC’s NasdaqStock Market LLC Rulemaking on the day of acceptance. Also, issuing a notice for a proposed rule change to list ad trade the shares of the iShare Bitcoin Trust.
On August 11, 2023, the regulatory agency delayed the approval of Cathie Wood’s Ark Invest’s ARK 21Shares Bitcoin ETF application. This might shock the investor, as she hoped to be the first to get approval for spot Bitcoin ETF.
Considering the data, the approval would be incredibly beneficial for the industry and the investors. At its peak, Grayscale Bitcoin Trust (GBTC) manages around $43.5 Billion worth of assets. The company also generated annual management fees of $870 Million.
No one can say when the SEC will approve this application, but the approval would surely open a new avenue for the industry. This scenario would greatly benefit retail investors wishing to get some Bitcoin exposure.
Saurav Bhattacharjee is in charge of the Broadcast development team of The Coin Republic.
He has been covering the Metaverse and NFT niche for the past 2 years.
With stellar interviews on his portfolio like Nicehash, Paxful, WallstreetWolvesNFT, Bitholla, Totemfi, EOS.io etc. Saurav has spearheaded the NFT SUPERSTARS AWARD and successfully hosted the first award in 2021.
Source: https://www.thecoinrepublic.com/2023/08/15/approval-of-spot-bitcoin-etfs-would-change-cryptos-demography/