BlackRock’s bitcoin ETF filing ignites the crypto tradfi takeover

Asset manager's are lining up behind BlackRock's filing

Theo Andrew

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Ever since the news BlackRock would be filing for a spot bitcoin ETF in the US earlier this month it seems as though tradfi (traditional finance) has been making a land grab on digital assets.

While BlackRock was not the first to file with the Securities and Exchange Commission (SEC), its move has been viewed with extra heft with asset managers including WisdomTree, Invesco and crypto index manager Bitwise Asset Management all reapplying with previously rejected filings.

Others are expected to follow and it is clear to see why. BlackRock has been denied by the SEC just once in 576 attempts when filing to list new ETFs in the US.

Conversely, the SEC is 33-0 in rejecting spot bitcoin ETF filings, highlighting how any decision hangs in the balance.

Bloomberg Intelligence’s Eric Balchunas gives the filing a 50% chance of succeeding.

“The deluge of other issuers refiling is part of why BlackRock’s [move] is so monumental and deserves the jump in odds because they know they would kick start all this, annoying the SEC, whom they are close with” he tweeted.

“They filed anyway, it heightens the, ‘what does BlackRock know?’ variable in my opinion.”

Whether or not BlackRock succeeds in its filing the move underlines tradfi’s commitment to crypto, even after a bleak ‘crypto winter’ – sparked by the collapse of terra and FTX – and as the SEC sets its sights on crypto exchanges.

Bitcoin has rallied 20% in the week since BlackRock filed on 15 June, surpassing the $30,000 mark for the first time since April this year, with the move tipped to renew demand from institutional investors, according to Saxo Bank.

While this would serve US institutions initially, the more established European crypto exchange-traded product (ETP) market would also likely feel the impact of a player such as BlackRock entering the fray.

Denys Peleshok, head of Asia at CPT Markets, said: “The initiative could reinforce the sentiment of increasing interest from large and institutional investors for bitcoin and cryptocurrencies in general.

“A successful launch of a bitcoin ETF could open the way for more inflows from individuals and professional investors alike. The investment vehicle could lower the barrier of entry into the market and attract significant volumes of investment into bitcoin in particular.”

Tradfi’s influence on crypto was extended further earlier this week with the launch of a new exchange backed by Fidelity International, Charles Schwab and Citadel Securities trading digital assets including bitcoin, ethereum, litecoin and bitcoin cash.

The SEC now has a big decision to make. Should BlackRock’s filing be successful, it is unlikely asset managers will look to stop at bitcoin ETFs, with other coins and multi-asset products likely to follow suit.

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