U.S. financial regulators held high-level meetings last week to discuss potentially allowing the first Bitcoin exchange-traded fund (ETF) to list in the country.
On November 20th, representatives from BlackRock, the world’s largest asset manager, and crypto asset manager Grayscale Investments met separately with officials from the Securities and Exchange Commission (SEC). The meetings indicate the SEC is seriously considering finally approving a spot Bitcoin ETF after years of rejection.
BlackRock Makes Case for Bitcoin Trust Models
In its presentation to the SEC, BlackRock detailed two models for how its planned Bitcoin trust could function. One model would involve in-kind creation and redemption of trust shares, meaning authorized participants could exchange Bitcoin directly for shares of the trust. The other model explored would use cash for creations and redemptions.
It is unclear how SEC officials responded to BlackRock’s proposed structure. But the asset manager’s meeting shows it believes U.S. regulators may now be more amenable to allowing a spot crypto ETF after previously balking at the idea.
Grayscale Pushes for Bitcoin ETF Conversion
Crypto investment product provider Grayscale also met with the SEC to discuss converting its popular Grayscale Bitcoin Trust (GBTC) into an ETF. Grayscale has been trying for years to turn its GBTC, which has over $8 billion in assets, into an SEC-registered investment vehicle.
If the SEC were to approve GBTC converting into an ETF, it would represent a huge boost for mainstream Bitcoin adoption. GBTC is already traded over-the-counter, so making it an SEC-sanctioned ETF would significantly broaden its investor base.
Other Firms Still Awaiting Bitcoin ETF Approval
BlackRock and Grayscale are just two of over a dozen investment managers seeking approval from the SEC for a Bitcoin ETF. Fidelity, WisdomTree, Invesco, Valkyrie, and VanEck also have Bitcoin ETF applications pending with U.S. regulators.
The SEC has thus far rejected all spot Bitcoin ETF bids over concerns the cryptocurrency market is susceptible to manipulation and lacks proper oversight. But the latest high-profile meetings suggest the SEC’s stance could be softening.
In a video from 2019 that recently resurfaced, current SEC Chairman Gary Gensler actually criticized the agency’s past “inconsistent” stance in rejecting crypto ETFs. Gensler’s apparent openness to Bitcoin products is fueling speculation an ETF could finally be approved soon.
Impact of Potential Bitcoin ETF Approval
Allowing the first Bitcoin product to trade on major U.S. stock exchanges would remove a massive roadblock to wider cryptocurrency adoption. It would give both institutional and retail investors easier access to gain exposure to Bitcoin’s price movements.
Investment experts say a spot Bitcoin ETF in the U.S. could see billions of dollars quickly flow into Bitcoin. That would likely catalyze even more institutions and mainstream investors to take the cryptocurrency market seriously.
It’s important to note, however, that the SEC has dashed the Bitcoin ETF hopes of other firms before. There is no guarantee U.S. regulators ultimately approve BlackRock or Grayscale’s crypto offerings. The roadblocks that previously existed, like concerns over volatility and potential manipulation, may still remain.
But the latest SEC meetings show it is taking major asset managers’ Bitcoin ETF applications seriously. We could be closer than ever before to the SEC making a groundbreaking decision to finally let an investment vehicle tracking Bitcoin’s price trade on America’s public stock exchanges. Such a move would be hailed as massive victory for the cryptocurrency industry.