Spot Bitcoin ETFs prospects brighten as Ex-BlackRock exec forecasts accelerated approval

A former high-ranking executive from BlackRock has suggested that regulators could potentially approve a spot Bitcoin exchange-traded fund (ETF) within the next “three to six months.” This revised timeline is shorter than the previous estimate provided by the ex-BlackRock official, who had initially indicated it might take as long as “nine to twelve months.”

Spot Bitcoin ETF approval could infuse $200 billion into crypto

Steven Schoenfield, former managing director at BlackRock and current CEO of MarketVector Indexes, has suggested that the potential approval of a spot Bitcoin ETF could lead to around $200 billion into Bitcoin investment products in the near term. He noted that this influx could potentially double or triple the number of assets under management in current Bitcoin products.

Schoenfield also expressed optimism about the approach taken by the SEC regarding spot Bitcoin ETF filings. Rather than outright rejection, the SEC has opted to delay these filings and seek comments, signaling a positive shift in dialogue. He also referenced the Grayscale lawsuit, which the SEC lost, indicating that this development will likely pave the way for converting the Grayscale Bitcoin Trust into an ETF. In a separate development, four congressional leaders recently urged SEC Chair Gary Gensler to “immediately” approve spot Bitcoin ETFs.

While BlackRock, currently managing $9.42 trillion in assets, has filed for a spot Bitcoin ETF with the SEC, they are among several traditional finance firms anticipating approvals. However, delays from the SEC are being encountered. AllianceBernstein, a global asset management company, has forecasted that approval of the BlackRock ETF could lead to a growth in crypto asset management of up to $650 billion.

However, Schoenfield believes that being the first to market may not necessarily give BlackRock a significant competitive advantage. He pointed out several other firms deeply committed to tradable digital assets, some of which have applications in progress and are closer to the crypto ecosystem than BlackRock. Schoenfield anticipates strong competition for BlackRock in this space.

Martin Bednall, another ex-BlackRock director and current CEO of Jacobi Asset Management, offered a contrasting view. He suggested that BlackRock’s industry prominence and substantial resources could give the company an edge in obtaining approval for the spot Bitcoin ETF.

Schoenfield emphasized that while BlackRock is a major player, it will face significant competition from firms equally committed to tradable digital assets. This competitive landscape will likely present a substantial challenge for BlackRock in this evolving space.

SEC is still concerned about the dangers of ETFs

The SEC has so far declined to approve the launch of spot Bitcoin ETFs, expressing concerns about potential fraud and manipulation on unregulated exchanges where digital tokens are traded. Interestingly, the SEC does not share the same reservations regarding futures contracts listed on the regulated Chicago Mercantile Exchange.

Despite losing a court case to crypto manager Grayscale, who contested the SEC’s refusal to allow the conversion of its $17.4 billion Bitcoin Trust into an ETF, the SEC has maintained its stance. That led some to speculate that the SEC might retroactively revoke approval for BITO and other similar Bitcoin futures ETFs to align its treatment of spot and futures Bitcoin ETFs. However, the SEC’s approval of ether futures ETFs seems to have dispelled that notion.

In addition to Grayscale, prominent asset managers such as BlackRock, Fidelity, Ark Invest, WisdomTree, VanEck, and Valkyrie have pending filings to launch spot Bitcoin ETFs.

Gautam Chhugani, a senior analyst specializing in global digital assets at Bernstein, noted a noticeable shift in the SEC’s stance towards crypto ETFs. He observed that the SEC is now more engaged and responsive to applicants compared to the past. Chhugani anticipates that the first Bitcoin ETFs could receive approval around early January.

Furthermore, there is a possibility that spot ether ETFs may also receive approval shortly after that. Companies like Ark and VanEck have filed to launch such products. Grayscale has also applied to convert its existing $5 billion Ethereum Trust (ETHE) into an ETF.