BlackRock Files Amended Version of Bitcoin ETF Application
BlackRock, the investment management giant, has submitted an amended version of its spot Bitcoin ETF S-1 application form. The updated filing includes additional pages that highlight the risks associated with Bitcoin and the crypto industry as a whole.
Bitcoin’s Lack of Transparency
The filing states that Bitcoin’s market is “unregulated” and “lacks transparency,” which can have an adverse effect on the value of the fund’s shares and cause losses to shareholders. BlackRock points out that due to the unregulated nature of digital asset exchanges and the wider Bitcoin market, chaotic events and fraudulent activities can impact the value of Bitcoin and, consequently, the value of the shares in the fund.
“Due to the unregulated nature and lack of transparency surrounding the operations of digital asset exchanges… as well as the wider bitcoin market, the value of bitcoin and, consequently, the value of the Shares may be adversely affected, causing losses to Shareholders,” wrote BlackRock.
The filing also references data from 2019 suggesting that a significant portion of spot Bitcoin volume was “false or noneconomic in nature,” particularly outside U.S. regulated venues. However, recent analysis indicates that fake volume as a share of total BTC volume has decreased over time.
Competition and Market Acceptance
BlackRock acknowledges the competition it faces from other applicants looking to launch a spot Bitcoin ETF. The company notes that there is no guarantee that its product will achieve initial market acceptance and scale due to this competition.
Bloomberg ETF analyst James Seyffart has stated that eleven companies are currently racing to launch a spot Bitcoin ETF as of October 17.
Progress on ETFs
Cathie Wood, CEO of Ark Invest, has noted a change in behavior from the SEC regarding Bitcoin ETF issuers. The SEC has been asking constructive questions about the applications, leading to hopes that one or more Bitcoin ETFs will be approved.
Mike Novogratz, CEO of Galaxy Digital, is also optimistic and predicts that a spot Bitcoin ETF will likely be approved within the next three months.
BlackRock CEO Larry Fink referred to Bitcoin’s recent rally as a “flight to quality” after its price surpassed $28,000.
Hot Take: BlackRock Highlights Risks and Competition in Amended Bitcoin ETF Application
BlackRock’s amended filing for a spot Bitcoin ETF emphasizes the risks associated with Bitcoin’s lack of regulation and transparency. The company warns investors of potential losses due to fraudulent activities and chaotic events in the crypto industry. Additionally, BlackRock acknowledges the intense competition it faces from other applicants vying to launch their own Bitcoin ETFs. Despite these challenges, there is optimism among industry experts that the SEC’s tone towards ETF issuers has shifted positively, increasing the chances of approval for one or more Bitcoin ETFs. Overall, BlackRock’s updated filing reflects the evolving landscape of cryptocurrency investments and highlights the need for careful consideration when entering this market.
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