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Title: Bitcoin ETF Battle Heats Up: BlackRock, Fidelity, and Invesco Prepare for SEC Action
In the financial world, Bitcoin has been making headlines for quite some time now. This digital currency has caught the attention of investors and Wall Street giants alike, causing a stir in the market. One of the major discussions in the crypto world is the possibility of a Bitcoin Exchange-Traded Fund (ETF), and the latest news is that the battle for a Bitcoin ETF is getting hotter.
The Securities and Exchange Commission (SEC) has received numerous proposals for a Bitcoin ETF, but they have all been met with rejection. This rejection has not stopped companies from trying, as major players like BlackRock, Fidelity, and Invesco have taken steps towards launching a Bitcoin ETF. Let’s take a closer look at what’s happening with the Bitcoin ETF battle and what it could mean for the cryptocurrency world.
The Powerhouses Behind the Battle:
BlackRock is the world’s largest asset management firm, with over $8.6 trillion in assets under management. They have a significant influence in the financial industry and are known for their innovation and ability to adapt to market trends. In 2018, BlackRock set up a working group to explore the potential of investing in cryptocurrencies and blockchain technology. They even added “Blockchain and Digital Currency” as an investment focus in their prospectus. This move showed a growing interest in cryptocurrencies and got the market excited about a possible Bitcoin ETF from BlackRock.
Fidelity Investments is a leading financial services company, managing over $4.9 trillion in assets. They were one of the first traditional financial institutions to dive into the world of cryptocurrencies, launching Fidelity Digital Assets in 2018. This subsidiary offers custodial services for Bitcoin and other cryptocurrencies to institutional clients. In early 2021, Fidelity filed for a Bitcoin ETF, stating that “the digital assets ecosystem has grown significantly in recent years.” With their experience and expertise, Fidelity is a strong contender in the Bitcoin ETF battle.
Invesco is another major player in the asset management space. With over $1.4 trillion in assets under management, they are a formidable force in the financial market. In April 2021, Invesco also filed for a Bitcoin ETF, stating that “Bitcoin’s time may have come” and that “investors are looking for ways to access digital assets through traditional investment vehicles.” This statement clearly shows that Invesco is confident in the demand for a Bitcoin ETF and is committed to pursuing it.
What is a Bitcoin ETF?
A Bitcoin ETF is an investment vehicle that tracks the price of Bitcoin and allows investors to buy and sell shares in the ETF. This is different from buying actual Bitcoin, as an ETF is traded on a stock exchange, making it more accessible and familiar to traditional investors. An ETF would also allow for more liquidity and price transparency, making it easier for investors to manage risks while investing in the volatile cryptocurrency market.
What is the SEC’s Concern?
The main concern for the SEC is the volatility and potential for market manipulation in the cryptocurrency market. The SEC has rejected all previous Bitcoin ETF proposals, citing the lack of regulatory oversight and the need for a more orderly market. To get approval from the SEC, a Bitcoin ETF would have to address these concerns and prove that it would not harm investors.
Progress in the Battle:
1. Grayscale’s Bitcoin Trust (GBTC):
While the SEC is yet to approve a Bitcoin ETF, the market has an alternative in the form of Grayscale’s Bitcoin Trust. This trust holds Bitcoin on behalf of investors and allows them to trade shares representing a certain amount of Bitcoin. This has been a popular investment option, with over $20 billion in assets under management as of June 2021. However, investors have to pay a premium for this trust, as it often trades at a higher price than the underlying Bitcoin. A Bitcoin ETF would give investors a more cost-effective and efficient option.
2. Canada’s Bitcoin ETF:
In February 2021, the Ontario Securities Commission approved the launch of Purpose Bitcoin ETF, the first Bitcoin ETF in North America. Since then, two more Bitcoin ETFs have launched in Canada, with total assets under management of over $1 billion. This has shown that a regulated Bitcoin ETF can be successful and has put pressure on the SEC to take action.
What Does a Bitcoin ETF Mean for Investors?
A Bitcoin ETF would make it easier for traditional investors to enter the cryptocurrency market. With a familiar investment vehicle like an ETF, many investors who were hesitant to buy Bitcoin directly would now have the confidence to invest.
2. Risk Management:
The volatile nature of Bitcoin is a significant concern for many investors. A Bitcoin ETF would allow for better risk management, as it would be subject to the same rules and regulations as other ETFs. This would provide assurance to investors and mitigate some of the risks associated with investing in Bitcoin.
3. Price Discovery:
Currently, the price of Bitcoin is determined by cryptocurrency exchanges, which can vary significantly. A Bitcoin ETF would bring more price transparency and allow for better price discovery, making it easier for investors to track the performance of their investment.
The battle for a Bitcoin ETF has been ongoing for years, and with major players like BlackRock, Fidelity, and Invesco joining the fight, it has become more intense. While the SEC has rejected all previous proposals, the launch of Bitcoin ETFs in Canada has shown promise and increased the pressure on the SEC to act. A regulated Bitcoin ETF would open the door for traditional investors and make it easier to manage risks in the volatile cryptocurrency market. Only time will tell how this battle will unfold, but one thing is for sure, the world is watching with anticipation.