The recent early dismissal of BlackRock’s planned spot Bitcoin exchange-traded fund (ETF) may seem like a setback, but according to Nasdaq executive Giang Bui, it is unlikely to affect the eventual success of the product. While the rejection by the U.S. Security and Exchange Commission (SEC) was based on regulatory procedural issues, it does not reflect the viability of the ETF itself.
Regulatory Procedural Issues vs.Product Viability
BlackRock filed an application for a spot Bitcoin ETF on June 15, and Nasdaq was responsible for filing the necessary rule changes to list the product. The SEC declared the filing inadequate on June 30, along with others, leading to its early rejection. However, this initial rejection is purely procedural and does not indicate any problems with the product or its potential.
The early rejections faced by BlackRock and other applicants should not be seen as a negative sign. Giang Bui stated that once the exchange files the necessary documents, the SEC has seven business days to reject it if it doesn’t comply with the SEC rules related to form. Therefore, the rejection at this stage is more of a procedural matter rather than an indication of the product’s viability.
Following the initial rejection, Nasdaq and other applicants submitted updates for their ETF applications and explicitly listed Coinbase as a surveillance-sharing agreement partner. This inclusion of Coinbase is unusual, but Nasdaq made this addition to strengthen its filing. It is worth noting that BlackRock’s proposed spot Bitcoin ETF is not the only application of its kind, as Vaklyrie Investments also has a similar proposal being handled by Nasdaq.
Similar Proposals and Surveillance-Sharing Agreement
Cboe, another exchange, is also handling proposals from various asset management firms such as Ark Invest, VanEck, WisdomTree, Invesco, and Fidelity, all of which describe a surveillance-sharing agreement with Coinbase. These proposals bear strong resemblances to each other and indicate a growing interest in Bitcoin ETFs among different market players. Additionally, NYSE Arca is handling an ETF proposal from Bitwise that also includes a surveillance-sharing agreement.
Grayscale’s Proposal and Legal Victory
In a slightly different approach, Grayscale aims to turn its existing GBTC fund into a spot Bitcoin ETF. Bui acknowledged Grayscale’s proposal and its recent legal victory, stating that Nasdaq is currently analyzing the implications of this victory on its own filings. This development further emphasizes the potential for Bitcoin ETFs in the market.
SEC’s Delayed Decision and Future Expectations
In late August, the SEC announced a delay in its decision on most of the spot Bitcoin ETF filings mentioned above. The market is eagerly awaiting the SEC’s decision, which is expected to be made in October. Despite the initial rejection and procedural hurdles, the interest and anticipation surrounding Bitcoin ETFs remain high.
While BlackRock’s spot Bitcoin ETF faced an early rejection based on regulatory procedural issues, the overall success of the product is still likely. The rejections faced by applicants are procedural in nature and do not indicate any inherent problems with the viability of Bitcoin ETFs. The inclusion of partners like Coinbase and the increasing number of similar proposals reflect a growing interest in Bitcoin ETFs among various market players. With the SEC expected to announce its decision in October, the future of spot Bitcoin ETFs holds significant potential in the financial market.
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