BlackRock’s Success Rate for ETFs with the SEC Stands at 575 to 1; How Does This Relate to Its Bitcoin Application?

The largest asset management firm in the world took a significant step toward its engagement in the cryptocurrency sector this week by submitting an application for a Bitcoin Spot ETF to the US Securities and Exchange Commission.

Given the numerous prior rejections of similar applications by other firms, the community questioned whether BlackRock’s endeavor was destined to fail from the outset. Nonetheless, the firm’s track record with the SEC has been notably exceptional thus far.

Will History Repeat, and for Whom?

The COVID-19 pandemic, the resulting monetary policies from central banks, and the surge in BTC’s price during 2020 and 2021 transformed the landscape in ways that few had the foresight to predict beforehand. A growing number of institutions began to take a more serious interest in the cryptocurrency sector, particularly in BTC.

At that time, it became almost routine for a new institution or prominent individual investor to announce their acquisition of bitcoin on a weekly basis. BlackRock, initially cautious, began with small investments through CME and supportive remarks from some of its executives.

While many institutions retreated during the bear market of 2022, especially following the notable collapses of the Terra ecosystem and FTX, BlackRock intensified its efforts with additional initiatives, including a Blockchain ETF in Europe.

In June 2023, however, the firm made its most substantial commitment to the sector by filing for a Bitcoin Spot ETF in the United States in partnership with Coinbase, which will serve as the custodian for the assets.

This action had an immediate favorable impact on BTC, with its price rising by over $2,000 in the days following the filing. The long-term implications could be even more advantageous for the entire sector if the ETF receives approval.

As per Eric Balchunas, Bloomberg’s senior ETF analyst, the historical odds appear quite favorable. BlackRock boasts an astonishing success rate regarding its ETF applications with the SEC—575 approvals compared to just one rejection.

Furthermore, the Commission reportedly turned down that application for an actively managed ETF because it did not require participants to disclose their holdings on a daily basis.

BlackRock Building. Source: FT

What is the Status of the BTC ETF in the United States?

While the SEC has approved several Bitcoin Futures ETFs, it has denied numerous Spot ETF applications. In fact, the continuous rejections led Grayscale, which is attempting to convert its flagship BTC product into an exchange-traded fund, to take legal action against the securities regulator.

The agency’s rationale has consistently been the same, asserting that the proposed ETFs do not adequately demonstrate how they will mitigate market manipulation and fraud.

Additionally, the SEC has pursued multiple crypto exchanges and tokens, claiming that most assets qualify as unregistered securities. Nevertheless, even its skeptical Chair, Gary Gensler, has previously acknowledged that BTC is a commodity.

Regardless, BlackRock’s timing is quite noteworthy, considering the SEC’s overall negative outlook on the industry. As one of the most powerful financial entities, it raises the question of whether BlackRock possesses insights that could sustain its remarkable success rate or if it will face its second loss.

SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.