For most of crypto’s lifespan, the main way for investors to add digital assets to their portfolios has been to buy individual tokens from a centralized exchange.
If you’re comfortable using exchanges like Coinbase or Binance and managing your own wallet, this hasn’t been an issue. But for many investors, a lack of crypto ETFs and funds has made it both intimidating and difficult to dive into the crypto world.
Thankfully, tides might be shifting. With companies like Grayscale and Blackrock pushing for Bitcoin EFFs and similar funds, a new investment opportunity could be on its way. However, the SEC remains adamantly anti-ETF, and has recently delayed its decision on Bitcoin spot ETFs.
Here’s everything you need to know about Blackrock’s Bitcoin ETF, the SEC’s delays, and what the future might hold.
The Rise Of Crypto ETFs
An ETF is a type of investment fund and exchange-traded product that is traded on stock exchanges. Typically, ETFs are made up of a variety of assets like stocks, bonds, or commodities, with the combined value of that fund being divided into shares.
Crypto ETFs follow a similar premise, and these funds are designed to track the price of a certain cryptocurrency token or groups of tokens. And with spot-based ETFs, the fund would actually hold the underlying crypto, like BTC or ETH, with a custodian.
This presents numerous advantages for everyday investors. For one, crypto ETFs remove the technical skills you need to use an exchange and manage your own wallet. This can make crypto investing seem much safer and palatable for traditional investors.
These ETFs can also make it easier to create a diversified portfolio via a secure brokerage and fund rather than dabbling in altcoins on potentially less-secure exchanges.
The SEC & BlackRock’s Bitcoin ETF Filing
In 2013, the Winklevoss twins, Cameron and Tyler, were the first to file an application for a Bitcoin ETF in the US through their company, Winklevoss Bitcoin Trust, with the Securities and Exchange Commission (SEC).
Since then, there have been additional applications for crypto ETFs from the likes of Grayscale, ARK, Fidelity, and WisdomTree. Additionally, BlackRock, the world’s largest asset manager, showed interest in Bitcoin in 2018 when it established a division to investigate cryptocurrencies and blockchain technology. And on June 15, 2023 BlackRock, filed for SEC approval of its own spot Bitcoin ETF.
This mounting pressure on the SEC to finally approve a spot Bitcoin ETF is positive news for investors. However, the SEC has delayed its decision on the filing for another 45 days. This delay comes mere days after federal courts ruled that the SEC is wrong to deny Grayscale’s spot Bitcoin ETF request.
This delay has slightly taken the wind out of Bitcoin ETF fan’s sails. According to Yahoo Finance, Bitcoin and other major cryptos saw a dip in price following the delay.
Thankfully, the SEC only has 45 days to reach a decision, and some analysts are bullish on these spot ETFs being approved in the near future.
The Future Of Bitcoin ETFs
Creating a Bitcoin ETF has several benefits for traditional investors interested in gaining exposure to Bitcoin without needing to handle the cryptocurrency directly.
With a Bitcoin ETF, more regulatory oversight could be provided mitigating some of the risks associated with investing in cryptocurrencies. Furthermore, investors wouldn’t have to worry about managing their own keys or cryptocurrency wallet. In short, these funds provide a hands-off approach with companies like BlackRock at the helm.
With recent events, it could be that these ETFs are also just around the corner. After BlackRock's filing, other asset management firms like Fidelity and WisdomTree, refiled paperwork for their own spot Bitcoin ETFs. And if the SEC approves one spot Bitcoin ETF, it stands to reason that the SEC should approve all of them to keep things fair; at least, that’s what Grayscale is arguing.
We’ll know more about the SEC’s decision in mid October. Hopefully, the entrance of the world’s largest asset manager in BlackRock provides the final push spot crypto ETFs need to make it past regulatory roadblocks.
The Bottom Line
The convergence of traditional finance firm like BlackRock and new technological investments like Bitcoin is a fascinating development in finance.
A spot Bitcoin ETF still has regulatory hurdles, and the SEC is digging in its heels. However, the future is exciting when you consider the potential benefits for investors and broader financial systems these funds offer.
As the world’s largest asset manager, BlackRock’s ETF filing will undoubtedly have an impact on the future of not just Bitcoin, but other cryptocurrencies as a whole. It could very well be that spot Bitcoin ETFs become available sometime this year, or in the near future.
Mike Damazo is a personal finance video creator. He is incredibly passionate about the NFT space, as well as cryptocurrency and DeFi in general. He also is known as BAYC #916.