As the cryptocurrency community closely monitors the final stages of the approval process for a spot Bitcoin exchange-traded fund (ETF) on Wall Street, expectations are building for a decision that could significantly impact the crypto market.
With asset managers finalizing their submissions and the United States Securities and Exchange Commission (SEC) poised to make a ruling, the coming days could mark a historic moment for Bitcoin and broader crypto adoption.
The Countdown to the ETF Decision
Eric Balchunas, a Bloomberg analyst, reports that asset managers are expected to complete their final revisions by the morning of January 8. These S-1 filings, due no later than 8:00 am Eastern Time, will disclose remaining fees and tickers for the ETFs, details eagerly awaited by the market.
Notably, major players like BlackRock have yet to reveal their ETF-associated fees. The 19-b4 amendment forms, submitted after the markets closed on January 5, together with the S-1 forms, represent the last steps before the SEC’s verdict.
The commission’s decision-making process may involve a vote by the SEC commissioners, though nothing is scheduled on their public agenda before January 11, the anticipated debut date of the ETFs. Balchunas mentioned that the SEC might opt for a decision using its delegated authority policy, which could mean automatic approval, given that past denials did not involve a vote.
Workforce Reduction at BlackRock Amidst ETF Anticipation
Amidst these developments, the world's largest asset manager, BlackRock, reportedly plans to reduce its global workforce by around 3%, affecting roughly 600 employees.
This move, according to a report from Fox Business, is part of routine internal adjustments based on employee performance over the past year. This workforce reduction coincides with BlackRock's anticipation of receiving a favorable decision from the SEC regarding its Bitcoin ETF application, with the SEC's deadline for BlackRock's application set for January 15.
The Potential Impact of Approval The approval of the first spot Bitcoin ETFs in the United States could be a watershed moment for crypto, signaling greater mainstream adoption both domestically and globally. As of January 5, filings for spot BTC ETF applications have been submitted by notable asset managers, including BlackRock, Valkyrie, Grayscale, and others.
These filings are crucial stages in the SEC's approval process, and their completion is essential for U.S. exchanges to start listing investment securities with direct exposure to crypto. Amidst this backdrop, Bloomberg ETF analyst Eric Balchunas expressed optimism on social media platform X (formerly Twitter) about the SEC approving a Bitcoin ETF by early next week.
However, U.S. financial advisers seem less confident, with only 39% believing in an approval this year, according to a survey by ETF issuer Bitwise. BlackRock's Strategic ETF Application Changes In December 2023, BlackRock made strategic changes to its Bitcoin ETF application to facilitate participation by Wall Street banks.
The firm introduced a new shares model with cash creation, allowing major banks to serve as authorized participants without directly holding Bitcoin or crypto. This in-kind redemption model is a significant adaptation, enabling BlackRock's ETF to bypass restrictions and potentially attract more institutional investors.
Controversy Surrounding the Bitcoin ETFs
While the potential approval of Bitcoin ETFs brings excitement, it also faces criticism. Dennis Kelleher, CEO of Better Markets, has strongly urged the SEC not to approve these ETFs.
In a letter to SEC secretary Vanessa Countryman, Kelleher emphasized the risks of potential fraud and market manipulation associated with the crypto industry, arguing that the approval of a spot Bitcoin ETF could lead to significant investor harm.
However, this view is not universally shared. Prominent crypto commentators and journalists have dismissed Kelleher's concerns. Bloomberg ETF analyst James Seyffart criticized the letter on social media, highlighting the substantial efforts by asset management firms in advancing their applications.
Fox Business journalist Eleanor Terrett also reiterated negative remarks made by Kelleher about crypto, recalling his past criticisms of the industry.
Latest Developments in ETF Applications For the past decade, the SEC has consistently denied approval of a spot BTC ETF, citing concerns over potential market manipulation.
I’m not saying this eleventh hour comment letter from @BetterMarkets will negatively impact an @SECGov approval of a $BTC Spot ETF but it’s definitely worth noting that SEC Chairman @GaryGensler and the President and CEO of Better Markets @DennisKelleher are tight (they served on… https://t.co/fy9MKHvBQl pic.twitter.com/Cc84m9jOov — Eleanor Terrett (@EleanorTerrett) January 5, 2024
James Seyffart from Bloomberg suggests that the regulator might now be "backed into a corner," indicating a possible shift in its stance. The approval of a Bitcoin ETF would not only be a significant milestone for the crypto industry but also a nod to the growing acceptance and maturation of cryptocurrency as a legitimate asset class.
In the latest news, 11 spot Bitcoin ETF applicants, including BlackRock, submitted their 19b-4 amendment forms before the close of business on January 5. These forms are one of the last stages in the SEC approval process. Some experts have speculated that final approval for the spot Bitcoin ETFs might occur before January 10, the deadline for an offering from ARK Invest and 21Shares.
Such an approval could significantly boost the adoption of crypto in the U.S. and globally. The pending decision on the Bitcoin ETF stands as a crucial test for the SEC and a defining moment for the crypto industry. Whether this leads to broader acceptance and integration of cryptocurrencies in traditional financial systems or maintains the status quo, the outcome is sure to be a topic of intense discussion and analysis in the financial community.