- BlackRock is said to have an incredible record in ETFs with 575 approved and one rejected application so far.
- A Bloomberg analyst suspects that the company probably has a reason for applying at a point the SEC is likely to reject.
BlackRock, the world’s biggest asset manager, recently joined the likes of Grayscale and Ark Investment to file for Bitcoin Exchange Traded Fund. As indicated by the filing with the US Securities and Exchange Commission (SEC), its iShares Bitcoin Trust would use Coinbase Custody as its custodian.
Interestingly, the filing comes at a point when the SEC has triggered enforcement actions against several crypto companies. The Commission has also labeled Coinbase as a non-compliant company. According to some observers, this could possibly lead to the rejection of BlackRock’s application just as the many unapproved ones. However, BlackRock is reported to have an interesting record in terms of ETFs.
According to reports, the company’s record of SEC approving its ETF is 575 to 1. This means out of the hundreds of ETF applications by BlackRock, SEC has approved 575 of them and rejected only one. The rejected application happened in October 2014 when the company wanted permission to manage an actively managed ETFs which does not need disclosure of holdings daily. Bloomberg’s senior ETF analyst Eric Balchunas observes that BlackRock “never plays around.”
Fun fact: BlackRock’s record of getting ETFs approved by the SEC is 575-1. That’s another reason this is so big, they don’t play around.
Does BlackRock Know Something?
Balchunas also feels the application is a shocker especially as it comes at a point SEC is obviously not willing to approve. Considering the fact that BlackRock is well connected, the analyst suspects that the company may know something. As part of his observation, ARK Invest has a live spot filing ahead of BlackRock which could be a big win for them.
Ark Invest has had its applications rejected two times – in March 2022 and January 2023. Grayscale, whose application was also rejected, has dragged the commission to court.
Another intriguing piece to this: Coinbase gets custody win but stands to lose both in clients and w/ fee pressure on trading costs if a spot ETF is approved. Think about it, why the hell would I pay Coinbase 40-100bps per trade when the ETF is 1bp?… Interestingly, in the bitcoin filing where they list all the things that could adversely affect the price of bitcoin (and there are many) they list the exchanges, which “are largely unregulated and may be subject to manipulation” which is the SEC’s issue with approving ETF.
In March, Larry Fink, the chairman, and CEO of BlackRock, disclosed that the company is optimistic about the potential of digital assets. This was due to the recent advanced use of the asset class in digital payments in many emerging markets.
Interestingly, developed markets like the US are getting behind the innovation according to the BlackRock CEO. He also observed that the tokenization of the asset class would likely drive efficiencies in the capital market. It would also improve cost and assets for investors while shortening value chains.
Considering the records of BlackRock in this space, investors are likely expecting the first Bitcoin ETF approval in the US which could send the prices of the crypto assets to new All-Time-Highs after billions of dollars flow into the market.
