Nasdaq Executive Offers Insights on BlackRock’s Spot Bitcoin ETF

Nasdaq’s Head of U.S. Equities & ETPs, Giang Bui, has provided reassurance that the early dismissal of BlackRock’s proposed spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) should not deter its ultimate success. Bui’s statements on September 13 shed light on the intricacies of the regulatory process and the path forward for crypto ETFs.

BlackRock applied for a spot in Bitcoin ETF on June 15, with Nasdaq responsible for filing Form 19-b4, which outlines the rule changes necessary for listing the product. However, on June 30, the SEC declared the filing, along with others, inadequate, leading to its early rejection. Importantly, this rejection primarily pertained to regulatory procedural issues rather than the substance or potential viability of the product.

Bui clarified that such early rejections are not necessarily a negative indicator for applicants. She explained that once the exchange files Form 19-b4, the SEC has seven business days only to accept it if it complies with SEC rules related to the form. This rejection at the initial stage is procedural and needs to reflect the product’s viability.

Following the initial rejection, Nasdaq and other entities updated various ETF applications, explicitly listing Coinbase as a surveillance-sharing agreement partner. Bui acknowledged that this practice is unusual but emphasized that it was done to strengthen the filing’s overall position.

BlackRock’s proposed spot Bitcoin ETF is one of many. Nasdaq is also handling a similar proposal from Valkyrie Investments. Meanwhile, other exchanges like Cboe manage proposals from multiple asset management firms, including Ark Invest, VanEck, WisdomTree, Invesco, and Fidelity. Many of these proposals share similarities and describe surveillance-sharing agreements with Coinbase.

In a different approach, Grayscale aims to transform its existing GBTC fund into a spot Bitcoin ETF. Bui acknowledged Grayscale’s proposal and its recent legal victory, indicating that Nasdaq is carefully assessing the implications for its filings.

Notably, in late August, the SEC delayed its decisions on most of the spot Bitcoin ETF applications mentioned. The crypto community is now eagerly awaiting the SEC’s forthcoming decisions, expected in October, which will play a pivotal role in shaping the future of crypto ETFs in the United States.

In conclusion, while the early SEC rejection may have caused some concerns, Nasdaq’s Giang Bui provides valuable insights into the regulatory process surrounding crypto ETFs. The ongoing developments and discussions within the regulatory landscape highlight crypto assets’ growing interest and importance in traditional financial markets.