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Prepare for Bitcoin ETFs: Payment Giant CEO Says a New Wave is Coming to Crypto

Published June 27, 2023 12:56 PM
Omar Elorfaly
Published June 27, 2023 12:56 PM

Key Takeaways

  • The market expects rising demand for ETFs after years of disappointment
  • Crypto CEO suggests regulations are ready to provide a stable crypto ETF market
  • Major investors are focusing on a Bitcoin-only future

Blackrock’s Bitcoin spot ETF application signaled a wave of ETF applications in the crypto market. The reason behind the hype is mostly related to Blackrock’s ETF application approval rates. The world’s biggest asset management firm has only had a single ETF application refused among hundreds approved. 

The news caused ripples across the crypto market, specifically for Bitcoin. The cryptocurrency saw a huge rise in value, and futures ETFs connected to it have seen serious money invested in their stocks. 

Since the SEC has always been the biggest hurdle in the way of ETF success in the market, many wonder about the future of crypto ETFs. The CEO of a major crypto firm says “Progress is being made.”

The SEC’s ETF Kill Streak

Whether an ETF will go through or not, it all comes down to what the US Securities and Exchange Commission decides. Countless financial institutions have applied for ETFs, especially in the crypto market, and have been shot down by the SEC, one after another. 

Many of these institutions are now applying again for ETFs with hopes that Blackrock’s application is paving the way for a more agreeable SEC. 

Take Valkyrie for example. The top-tier financial services firm that aims to bridge the gap between TradFi and DeFi applied  for an ETF back in 2021. In its filing, the company claimed that it’s “providing investors with an efficient means to implement various investment strategies.” But the SEC took a whole year to give the company a resounding “no”.

Now, Valkyrie is back with another application. This time, the company is aiming to create a way for investors to put their money into digital assets through traditional investment methods. 

The same story can be said about Wisdomtree a global exchange-traded fund, exchange-traded product sponsor, and asset manager with over $87 billion in assets. The company filed for also filed for an ETF  back in 2021. Once again, the SEC kept stalling for the better half of a year, until, you guessed it, rejected the application.

Wisdomtree is now back with another ETF application with the same regulating body, following Blackrock’s footsteps.

And, the list of investment firms reapplying for ETFs following the news about Blackrock goes on and on.

What Changed?

Since the SEC is at the heart of all ETF rejections in the past, many speculate that the regulating body now has a clearer structure for ETF applications and operations in the market. 

In an interview with Bloomberg, Jeremy Allaire, co-founder, CEO, and Chairman of Circle, the creator of USDC, the second-biggest stablecoin in the country, had a lot to say about the progress regulations have made in the crypto market. 

“In terms of regulatory approvals…progress is being made.” Allaire reported , adding that “You have mature spot markets. You have a mature custody infrastructure that is well structured. You have good market surveillance. Many of the things that have been concerns in the past are being addressed and suggest that these kinds of products are more likely to be approved for investor access.”

Responding to the interviewer’s mention of the Blackrock spot ETF application and increased focus on Bitcoin by financial institutions, such as Valkyrie and Proshares, Allaire had this to say:

“Digital stores of value like Bitcoin remain compelling as a hedge instrument in the context of continued persistent inflation and weakening currencies.”

Market stakeholders may attribute the current optimistic value trend of Bitcoin, as well as the SEC’s legal approval for Bitcoin’s status as a viable payment method to the increased interest in ETFs that specifically target investment in the first-ever cryptocurrency.