BlackRock's ETF success ratio with the SEC is 575 to 1, what about its Bitcoin application?

BlackRock's ETF success ratio with the SEC is 575 to 1, what about its Bitcoin application?

The world's largest asset manager took a major step toward its involvement in the cryptocurrency industry this week by filing with the U.S. Securities and Exchange Commission for a Bitcoin spot ETF.

Given that many other companies' applications for such a product have already failed, the community wondered whether BlackRock's attempt seemed doomed from the start. However, the giant's success rate with the SEC has been rather unmatched so far.

History must repeat itself, but for which side?

The COVID-19 pandemic, subsequent central bank monetary policy, and the rise in BTC price in 2020 and 2021 have changed the game in ways that few were bold enough to imagine before this moment. Numerous institutions began to look more seriously into the cryptocurrency industry and BTC in particular.

Back then, it was almost expected that a new institution or individual old investor would announce its Bitcoin purchase on a weekly basis. Although initially hesitant, BlackRock launched with smaller investments through CME and received encouraging comments from some of its executives.

While many institutions backed down during the 2022 bear market, particularly in the wake of the high-profile collapses of the Terra ecosystem and FTX, BlackRock doubled down with a few more initiatives, including a blockchain ETF in Europe.

However, in June 2023, the giant made its biggest bet on the industry by filing for a Bitcoin spot ETF in the US alongside Coinbase, the custodian for the funds.

The move had an immediate positive impact on BTC and its price, which surged by over $2,000 in the first few days after the filing. The long-term consequences could be even more beneficial for the entire industry if this ETF is approved.

After According to Eric Balchunas – Bloomberg's senior ETF analyst – the odds are quite high, at least historically speaking. BlackRock has an overwhelming success rate when it comes to its ETF applications: The SEC has only approved one rejected application - 575.

Additionally, the Commission reportedly rejected this application for an actively managed ETF because it did not require participants to disclose their holdings on a daily basis.

BlackRock Building. FT

What about BTC ETFs in the US?

While the SEC has given the green light to some Bitcoin futures ETFs, it has rejected countless spot ETF applications. In fact, the endless denials prompted Grayscale, which is trying to convert its flagship BTC product into an exchange-traded fund, to sue the securities regulator.

The agency's rationale was always the same: the proposed ETFs would not demonstrate how they would prevent market manipulation and fraud.

Additionally, the SEC is now targeting several crypto exchanges and tokens, claiming that most of the assets are unregistered securities. Still, even its skeptical chairman – Gary Gensler – has admitted in the past that BTC is a commodity.

In any case, BlackRock's timing is quite interesting given the SEC's overall negative stance on the industry. However, as one of the most influential financial players, the question is whether BlackRock knows something we don't that will help it continue its spectacular run of success, or whether it will post its second loss.

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