ETFs are hardly a new thing for crypto, with the first ever Bitcoin ETF being launched in 2021. However, the latest news on BlackRock’s proposed Bitcoin ETF could mean big things for the crypto industry. When the Bitcoin network first went live in 2009, very few could have predicted that it would come to this moment. What started as a decentralised peer-to-peer payment network has become one of the most talked about financial assets in the world.
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BlackRock is an American multinational investment company and the largest asset manager in the world. The company currently manages more than $9 trillion in assets, and last week it refiled paperwork with US regulators to add more details to its proposal for a Bitcoin ETF.
What is an ETF?
ETF stands for exchange-traded fund, and it’s a type of pooled investment security that works a lot like a mutual fund. They’re bought and sold on the stock market, just like regular stocks. However, they’re normally used to group multiple stocks into one basket, allowing investors to easily and safely invest in a wide range of companies.
A Bitcoin ETF is tied to the price of Bitcoin, and other cryptocurrency ETFs also exist. The first-ever Bitcoin ETF was approved by the SEC and launched on October 19, 2021. Since then, numerous crypto ETFs have launched, giving investors a way to invest in crypto through the stock market.
However, so far, the SEC has only been willing to approve ETFs based on cryptocurrency futures rather than spot trading. This means that the current ETFs aren’t backed by real Bitcoin, and they’re more suited to trading rather than long-term investment.
The BlackRock Bitcoin ETF
While the SEC has so far been unwilling to approve spot Bitcoin ETFs that are backed by real Bitcoin, there is a growing feeling that this could change. Major investment management company BlackRock first filed an application for a spot Bitcoin ETF in June 2023. Soon after the filing, other companies, such as Fidelity Investments and Investco, filed similar requests with the SEC.
The main reason for the SEC’s unwillingness to approve these types of ETFs so far has been due to the potential risk of market manipulation and fraud in the crypto market. However, BlackRock’s most recent application included provisions that major cryptocurrency exchange Coinbase would carry out market surveillance to reduce these risks.
Increased market surveillance is the key to getting the SEC onside and approving the first spot Bitcoin ETF. However, it’s still unclear whether these provisions will be enough to sway the organisation that has previously taken such a hard line against cryptocurrency.
What Will the ETF Mean for the Cryptocurrency Market
Since BlackRock filed its application for the Bitcoin ETF, the cryptocurrency market has reacted positively. Bitcoin increased in value by more than 10% over the past month, and the entire market has experienced a strong rally.
BlackRock has a huge reputation as the world’s largest asset manager, so it’s only natural for people to see it as a positive for the crypto industry. A Bitcoin ETF would allow great investment in Bitcoin, including through people’s pension funds.
Furthermore, the approval of the ETF by the SEC would significantly enhance the credibility of the cryptocurrency market, which has historically faced concerns regarding fraud, financial crime, and manipulation. This endorsement from traditional banking institutions would contribute to the expansion of the broader crypto economy, unlocking a myriad of opportunities for businesses like AWISEE, a leading crypto SEO agency, as well as attracting a wider range of investors.
However, there are some that feel that Bitcoin and other cryptocurrencies are stronger for not being linked to traditional financial institutions. Bitcoin was created in response to the 2008 financial crisis, and some feel that a Bitcoin ETF would mean the cryptocurrency is moving away from what makes it unique.