BlackRock, the world’s largest asset manager, resubmitted its proposal for a Bitcoin spot ETF yesterday, sparking excitement and speculation within the crypto community. The June 29 resubmission caught the attention of market watchers as it made public BlackRock’s strategic partnership with Coinbase and a potentially crucial gambit that might allow BlackRock to win the race for the first Bitcoin spot ETF.
BlackRock’s Advantage: Ahead Of The Pack
A crucial question that arises is whether BlackRock’s filing provides enough detail to address the Securities and Exchange Commission’s (SEC) concerns about surveillance data sharing agreements (SSAs). Sam Callahan, senior analyst at Swan Bitcoin, highlights the importance of this and questions whether BlackRock’s filing could actually meet the SEC’s requirements.
James Seyffart, expert at Bloomberg Intelligence responded that SSAs are common practice in the industry. This means that BlackRock and Coinbase’s joint surveillance agreement could pave the way for regulatory approval.
Here’s also BlackRock’s ace against ARK, Fidelity, Invesco, Bitwise and WisdomTree. While BlackRock’s resubmission refers to an actual agreement with Coinbase that went into effect on June 16, all of its other competitors only plan to enter into an agreement with Coinbase.
BlackRock’s ace against ARK, Fidelity, Invesco and all others. Possibly the reason why BlackRock gets the first approval of a spot #Bitcoin ETF. https://t.co/QLH24LGCeu
— Jake Simmons (@realJakeSimmons) July 3, 2023
Possibly, this could be the reason why BlackRock delayed its resubmission and is now surprising all competitors to get the first approval and thus the first mover advantage. In addition, Seyffart noticed something else:
This should be illegal. Backdating it to 6/29 or just Nasdaq taking forever to post. ha. So BlackRock theoretically behind Ark/21Shares but ahead of the CBOE crew which are all filed as of 6/30. Interesting to say the least.
The analyst added to the tweet that Bitwise Invest and NYSE are also ahead of BlackRock with a June 28 filing, but they also have the possibly crucial flaw: “but they don’t *yet* have the surveillance sharing agreement language in their application.” Geraci writes:
Stating the obvious, but there’s a reason the word “agreement” is in “surveillance sharing agreement”… There actually needs to be a formal arrangement in place. “Expecting to enter into an agreement” is not the same as having an actual agreement. That’s the difference here.
Another important consideration for the SEC will be whether Coinbase, with its 56% dominance in dollar-to-bitcoin trading on U.S. platforms, constitutes a “market of substantial size.” Nate Geraci, co-founder of ETF Institute, believes the current trading volume on Coinbase could meet the SEC’s criteria.
However, Geraci also notes that the SEC’s decision will ultimately depend on its inclination to approve a Bitcoin ETF and its definition of a regulated market. Eric Balchunas, senior ETF analyst at Bloomberg, speculates that the SEC may favor Coinbase over other exchanges, which could further increase volume if ETFs are approved:
There’s also another sub-theory that SEC wants Coinbase to get all the new big boy ETF volume bc they prefer them to Binance. If that has any truth then the lower-ish volume prob not an obstacle. But again no hard evidence of this, only theorizing.
Odds For The First Bitcoin Spot ETF Issuer
With the surveillance sharing agreement (SSA) already signed, BlackRock has strategically positioned itself as the frontrunner in the race to launch a bitcoin spot ETF over the other major players such as ARK, Fidelity, Invesco, and WisdomTree.
While Bitwise Invest and ARK’s applications are older than BlackRock’s, they lack the crucial existing surveillance sharing agreement, giving BlackRock a head start on the competition. And the market sees it the same way.
Here’s the latest odds from ETF Draft Kings (aka @NateGeraci). This is a TOUGH choice, which is how you know the odds are good. pic.twitter.com/1t2e2MdUwj
— Eric Balchunas (@EricBalchunas) July 3, 2023
At press time, Bitcoin was at $30,936 after the price was rejected yesterday at the yearly high.
