The competition to launch an ETF on spot Bitcoin in the United States is getting more intense, with two new applications announced in the last twenty-four hours.
Let’s see below all the details about them.
All the new applications for ETFs on spot Bitcoin
Last week, WisdomTree, an asset management firm, submitted an application for the WisdomTree Bitcoin Trust, a fund that would be traded on the Cboe platform.
Similarly, Invesco, an asset manager with $1.4 trillion in assets, submitted an application for its own Bitcoin spot ETF, which has been dubbed the Invesco Galaxy Bitcoin ETF.
In addition, BlackRock, the world’s largest investment firm, recently submitted an application to gain approval for a Bitcoin-based Spot Exchange Traded Fund (ETF).
According to a report sent by Nasdaq to the US Securities and Exchange Commission (SEC), Coinbase Custody Trust Company would be responsible for the custody of the fund’s Bitcoin holdings, while Bank of New York Mellon will handle the custody of the fiat currency.
However, the first hurdle they will face is SEC approval. In fact, despite numerous requests, the Securities and Exchange Commission (SEC) has not yet approved the ETF.
In any case, the news of the application filed by BlackRock has sparked great enthusiasm among investors in the cryptocurrency sector. This led to a positive reaction on the price of Bitcoin, which rose as high as $28,000 in a short period of time.
Despite the response of the SEC, which has denied similar proposals in the past, some renowned analysts in the decentralized finance industry express high confidence about the potential launch of this ETF.
What are BlackRock’s chances of securing the first US ETF on spot Bitcoin?
As anticipated, although it is not yet permitted in the United States, it is believed that a spot ETF from a reputable entity such as BlackRock may have a better chance of overcoming the legal impasse.
In the meantime, there are clear signs of optimism beyond market sentiment.
In fact, long GBTC is trading at a significant discount to spot BTC, which is rising in value.
According to CoinGlass, currently that discount, or negative “premium,” used to describe GBTC stock prices, is about -36.6%
Although it is still significantly discounted, GBTC is closer to zero than it has ever been at any other time of the year.
For example, on 13 June, the discount was close to -44%. Adam Cochran, partner at venture capital firm Cinneamhain Ventures, commented on the news this way on Twitter:
According to Cochran, therefore, BlackRock’s offer has a “good chance” of being approved by US authorities. Indeed, he points out that this is a very different structure than previous attempts, coming from a behemoth that knows no defeat.
A 30-deed redeemable trust with redemptions is proposed, unlike GBTC, and a proposed rule change is also presented. In conclusion, Cochran states that they entered the field with determination.
Mixed opinions about BlackRock’s ETF: is it for real or not?
BlackRock’s initiative is already the subject of controversy, as market experts raise questions about whether it is really an ETF. While some people argue that it is merely a Trust similar to GBTC, others, like Cochran, take a more in-depth interpretation.
“In the ETF vs Trust debate, many ETFs have alternative structures. This is an ETF as a callable trust not a GBTC. The Trust component is basically what allows them to list stocks representing X amount of BTC since they don’t process units of BTC directly in a clearing house.”
Cory Klippsten, CEO of Bitcoin financial services company Swan, also commented positively on the news on Twitter:
IT’S OK TO CALL IT AN ETF GUYS.
Securities Act of 1933 filing under Form S-1, NOT Form N-1A (like 99% of stock ETFs).
Will trade on exchange and be redeemable to the issuer. WAY better than GBTC.
Now we’ll wait to see if the SEC approves Blackrock’s spot Bitcoin ETF.
— Cory Klippsten
Swan.com
#Bitcoin (@coryklippsten) June 16, 2023