You probably recall the gleam of anticipation over the approval of a bitcoin exchange-traded fund months ago. Arguably, many are feeling an uncanny sense of deja vu as BlackRock, the financial titan, stirs up enthusiasm by joining the race for an ETF. This entails bridging a gap of nearly a decade since the industry’s first attempts to birth a bitcoin ETF.
Tracing back to the legacy of the Winklevoss twins’ effort to pioneer a bitcoin exchange-traded fund in 2013, the industry’s patience is stretching thin with no spot bitcoin product in sight after more than a decade. Now, you may question: What’s the fuss about a bitcoin ETF? The answer is manifold; a bitcoin spot ETF greenlit by the Securities and Exchange Commission (SEC) will make digital asset exposure accessible to retail investors shying away from cumbersome wallet setups and capricious crypto exchanges. Furthermore, a regulated bitcoin product has the potential to entice sophisticated investors as a relatively safe investment avenue.
The rollercoaster journey of hopping between hope and disapproval began with the Ontario Securities Commission approving the premier North American bitcoin ETF over two years ago. This was followed by twitching expectations that a U.S. product may take a bow soon. The U.S. SEC further amplified these sentiments by sanctioning the debut bitcoin futures ETF in 2021. Fast-forward to the present, and the anticipation builds anew with BlackRock’s recent filing for a spot bitcoin ETF.
Yet the most significant development of recent times lies in the applicants’ increased efforts to detail their surveillance-sharing agreements, an element that the SEC has historically prioritized to combat potential market manipulation. The SEC’s insistence on these agreed norms became apparent in 2019, evident in its Bitwise’s bitcoin ETF application rejection, citing the “lack of adequate surveillance-sharing agreement” as a significant roadblock.
However, what constitutes a “regulated market of significant size” remains elusive, Coinbase appearing to be the likely candidate to accommodate the surveillance-sharing requirements for the potential ETF issuers. It is the largest U.S. crypto exchange possessing more than twice the 24-hour trading volume compared to its nearest competitor. The question arises: Will the SEC grant concessions on the basis of Coinbase serving as a sufficiently sizable and regulated bitcoin market?
Last year, the regulator contradicted the notion that there exists a regulated market for bitcoin. Concurrently, BlackRock/Nasdaq suggests the need for a respective market is largely superficial. This curious paradox shapes the future trajectory of spot bitcoin ETFs in the U.S, leaving us with an open-ended question about the evolution of the crypto industry.
Source: Coindesk
