Key Points

  • BlackRock has applied with the SEC to offer a spot Bitcoin ETF.
  • Other institutional investors like ARK and Grayscale are also waiting to hear from regulators about similar assets.
  • The development has sparked controversy in the crypto community as they try to determine if it is a good or a bad thing for crypto, as BlackRock is the world’s largest investor and could lead to an ‘institutional Bitcoin grab’.

A BlackRock Bitcoin ETF has sparked controversy among the crypto community as they determine if the $10T asset manager is their savior or doom. BlackRock is known to own large amounts of shares in most public companies. As such, the crypto community is not sure whether the application for a Bitcoin ETF will propel mainstream adoption or urge for centralized control.

Is BlackRock Bitcoin ETF the best thing to happen to crypto?

If approved, the BlackRock Bitcoin ETF will hit the U.S. markets first before being available in other nations. Per a filing by the Nasdaq stock exchange with the U.S. Securities and Exchange Commission, Coinbase Custody Trust Company will be the custodian of the fund’s Bitcoin funds. At the same time, the Bank of New York Mellon will be the custodian of its fiat reserves. 

The filing describes it as an iShares Bitcoin Trust that would be traded as Commodity-Based Trust Shares. An excerpt from the filling reads:

“The Shares have been designed to remove the obstacles represented by the complexities and operational burdens involved in a direct investment in bitcoin.”

The SEC has yet to approve a spot Bitcoin ETF despite numerous applications as it considers the asset highly unregulated. BlackRock reiterated this, saying:

“As such, the regulated market of significant size test does not require that the spot bitcoin market be regulated in order for the Commission to approve this proposal.”

Crypto community reacts to BlackRock Bitcoin ETF

The news of BlackRock Bitcoin ETF was received with mixed reactions by the crypto community, with individuals like Galaxy Digital CEO Mike Novogratz being among the ones over the moon with the news. However, some warned that it could be a start of a major institutional takeover.

In an interview on June 16, Mike Novogratz said that BlackRock Bitcoin ETF is “the best thing that could happen to BTC.”

“I say a Hail Mary every night that Larry Fink and BlackRock pull off a Bitoin ETF,” Novogratz added on the Fox News segment. 

However, some people are against the introduction of the BlackRock Bitcoin ETF. Investor Scott Melker explained in a June 16 interview that approval would be a disservice to crypto-native innovators who built the industry.

“As good as this may be for institutional adoption of the space, it kind of violates the ethos, it is a bit of a dishonest push away from the people who built the industry in the United States.”

Cinneamhain Ventures partner and Ethereull bull Adam Cochran also believe that BlackRock could swoop in on retail investors’ highly discounted Bitcoin coins. This theory has also been widespread via social media, which many people believe could be bad. It creates a bad image for regulators contributing to “fudding” the industry.

Conversely, some analysts feel that it’s likely that Bitcoin will hit the $1M mark. This has been a market sentiment shared by the likes of Balaji. Steven Lubka, a meaning director at Swan Bitcoin, has shared a similar view saying that BTC will hit the $1M mark. Still, only a few retail investors will reap the rewards as a bulk of the coins will be owned by large institutional investors like BlackRock, Goldman Sachs, and others.

Following the news, the Fear and Greed Crypto Index increased by 6 points from 41 to 47-leaving the fear zone. However, it’s still being determined if the market will get further momentum as the SEC may or may not approve the ETF. Keep watching Fintech Express for updates on this and other fintech-related developments.