BlackRock, the world’s largest asset manager, yesterday resubmitted its Bitcoin spot ETF proposal, sparking excitement and speculation in the crypto community. The June 29 resubmission caught the attention of market watchers as it revealed BlackRock’s strategic partnership with Coinbase and a potentially pivotal move that could allow BlackRock to win the race to become the first Bitcoin spot ETF.
The BlackRock Advantage: Ahead of the competition
A key question to ask is whether BlackRock’s filing provides enough detail to address the Securities and Exchange Commission’s (SEC) concerns about surveillance data sharing agreements (SSAs). Sam Callahan, senior analyst at Swan Bitcoin, stresses the importance of this fact and questions whether BlackRock’s filing could actually meet SEC requirements.
James Seyffart, an expert at Bloomberg Intelligence, responded that SSAs are standard practice in the industry. That means BlackRock and Coinbase’s joint oversight agreement could pave the way for regulatory approval.
Also here is BlackRock’s ace against ARK, Fidelity, Invesco, Bitwise and WisdomTree. While BlackRock’s resubmission refers to an actual agreement with Coinbase that came into effect on June 16, all other competitors simply plan to enter into an agreement with Coinbase.
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BlackRock’s ace against ARK, Fidelity, Invesco and everyone else. Possibly why BlackRock gets its first spot #Bitcoin ETF approval. https://t.co/QLH24LGCeu
— Jake Simmons (@realJakeSimmons) July 3, 2023
Possibly this could be the reason why BlackRock has delayed its resubmission and is now surprising all competitors with the first approval and thus the first mover advantage. In addition, Seyffart noticed something else:
That should be illegal. Backdating to 29.06. or just that Nasdaq is taking forever to publish it. Ha. This puts BlackRock behind Ark/21Shares in theory, but ahead of the CBOE crew, all of whom on 6/30. are registered. Interesting to say the least.
The analyst added to the tweet that Bitwise Invest and NYSE are also ahead of BlackRock with a filing filed on June 28, but they may also have a key flaw: “But they don’t *yet* have the language of the surveillance release agreement in their filing.” “ ” Geraci writes:
I’m stating the obvious, but there’s a reason the word “agreement” appears in “surveillance sharing agreement”… There really needs to be a formal agreement. “Expecting to enter into an agreement” is not the same as having an actual agreement. That’s the difference here.
Another key consideration for the SEC will be whether Coinbase, with its 56 percent dominance of dollar-to-bitcoin trades on U.S. platforms, represents a “considerable size market.” Nate Geraci, co-founder of the ETF Institute, believes that current trading volume on Coinbase may meet SEC criteria.
However, Geraci also notes that the SEC’s decision will ultimately depend on its propensity to approve a Bitcoin ETF and its definition of a regulated market. Eric Balchunas, senior ETF analyst at Bloomberg, speculates that the SEC may favor Coinbase over other exchanges, which could further increase volume if ETFs are allowed:
There is also another sub-theory that the SEC wants Coinbase to get all the volume of the new big ETFs because they prefer them over Binance. If that’s true, then the lower volume is probably not an impediment. But again, there is no hard evidence for this, only theories.
Odds for the first bitcoin spot ETF issuer
With the Surveillance Sharing Agreement (SSA) already signed, BlackRock has strategically positioned itself as the frontrunner in the race to launch a Bitcoin spot ETF over the other big players like ARK, Fidelity, Invesco and WisdomTree.
Although Bitwise Invest and ARK’s applications predate BlackRock’s, they lack the crucial existing surveillance sharing agreement, giving BlackRock an edge over the competition. And the market sees it the same way.
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Here are the latest ETF Draft Kings (aka @NateGeraci) odds. This is a HARD choice, so you know the odds are good. pic.twitter.com/1t2e2MdUwj
— Eric Balchunas (@EricBalchunas) July 3, 2023
At press time, Bitcoin is trading at $30,936 after the price was rejected at the yearly high yesterday.
BTC price fails to make new yearly high, 2-hour chart | Source: BTCUSD on TradingView.com
Featured image from Forbes, chart from TradingView.com
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