January Passes Through Inevitability? Bitcoin Spot ETF Has Become BlackRock's "Key Priority"

The Bitcoin spot ETF has not yet been approved, and issuers Bitwise and Hashdex have released consecutive advertisements to warm up the market. Furthermore, foreign media outlet Fox Business quoted several traditional financial professionals who believe that many large fund management companies are increasingly confident that the SEC will approve a Bitcoin spot ETF in January next year.

SEC prefers cash mode due to concerns over money laundering and market manipulation

SEC has been meeting with numerous ETF issuers in the past few weeks, and the issuing institutions have also made consecutive revisions to their ETF application documents.

Unlike traditional ETFs, SEC requires applicants for physically-backed Bitcoin ETFs to purchase ETF shares with cash. This cash mode is considered more complex and may result in investors losing important tax benefits.

Illustration of ETF: How does SEC's preferred cash mode differ from the physical Bitcoin ETF offered by BlackRock?

CEO of CoinRoutes, Dave Weisberger, commented on this:

SEC does not allow broker-dealers like Robinhood and Fidelity to directly trade spot BTC. The cash mode essentially shifts the "burden of Bitcoin trading" from market makers to authorized participants such as Morgan Stanley and Goldman Sachs. This reduces competition among issuers, and sales volume will depend on which issuer has better resources and trading strategies.

An insider who has met with the SEC explained that the SEC is concerned about Bitcoin being used for money laundering, market manipulation, and other illegal purposes.

Physically-backed Bitcoin ETF is a "top priority" for BlackRock

Fox Business revealed that getting approval for a physically-backed Bitcoin ETF has become a "top priority" for BlackRock. BlackRock CEO, Larry Fink, previously described Bitcoin as an "international asset" and a "store of value" tool that can rival gold in the long term.

According to Fox Business, BlackRock has had 5 meetings with the SEC regarding the physically-backed Bitcoin ETF, and the SEC has held about 24 meetings with other issuers, all indicating that various institutions are working hard to launch the ETF officially next year.

Grayscale lawsuit adds pressure, making it difficult for the SEC to reject all ETF applications

Although the SEC has the power to reject all applications from issuers, industry insiders believe the likelihood is low, as a US court ruled in August that the "SEC's rejection of GBTC's transformation into a physically-backed ETF" was unreasonable, with the judge claiming that the SEC's actions were "arbitrary and capricious".

Fox Business pointed out that this is seen as an important precedent by many ETF fund managers.

Read more about the logic loophole of the SEC! Why did the court find the SEC's rejection of Grayscale's physically-backed ETF application unreasonable?