BlackRock's Potential Entry into Crypto Signals a Turning Point for the Industry
In the midst of the intense regulatory crackdown on the crypto industry, a ray of hope has emerged. BlackRock, the world's largest asset manager, has submitted an application to launch a Bitcoin exchange-traded fund (ETF). This development could be a game changer for the industry, momentarily shifting the prevailing doom-and-gloom narrative surrounding crypto.
If approved, the Bitcoin ETF would provide an avenue for conservative institutions, including pension funds bound by restrictive bylaws, to include Bitcoin shares in their portfolios. This infusion of institutional capital would introduce greater diversity and liquidity into the market, potentially driving up the prices of Bitcoin and other crypto assets.
The prediction of institutional investors entering the crypto space has been a long-standing expectation, but it has largely remained elusive. However, BlackRock's immense size and reputation as a blue-chip firm could indicate that this time it might become a reality.
The Securities and Exchange Commission (SEC), known for its cautious stance on crypto, holds the power to approve or reject BlackRock's ETF application. While the SEC has previously rejected numerous Bitcoin ETF applications, something feels different this time. As Bloomberg noted, BlackRock excels at interpreting regulatory trends and likely believes it has a higher chance of receiving the green light. Furthermore, the proposed ETF would rely on Nasdaq for asset pricing, potentially undermining the SEC's argument against a Bitcoin spot market ETF being vulnerable to price manipulation.
The situation also raises questions about the future of Grayscale, which operates a sizable Bitcoin trust and is awaiting an appeals court ruling on the SEC's denial of its own ETF application, which Grayscale believes was unfair and arbitrary. Analysts anticipate that Grayscale may win the case, and it remains to be seen whether the company will emerge as a major player in the new crypto ETF market or be overshadowed by the larger and more established BlackRock.
While BlackRock's ETF application does not signal an immediate end to the challenges faced by the crypto industry, it does provide a rare glimmer of good news. It serves as a reminder that crypto is here to stay and will continue to grow in the long run.
As we conclude the week, please note that Fortune Crypto will be on a break on Monday in observance of the Juneteenth holiday. Additionally, the author will be relocating to Southern California, an area that has become a hub for crypto activity. Looking ahead, there is anticipation of meeting members of the crypto community in person. During the author's absence next week, colleagues Leo and Marco will take over. Enjoy your weekend.