Blackrock, the world’s largest asset manager, has recently filed for a spot Bitcoin ETF. This has been a source of hope in the crypto space for years, but the SEC has yet to approve any such application.
Exchanges have been struggling over the last year. Coinbase, Kraken and Crypto.com have all announced layoffs, and the SEC has filed lawsuits against Binance and Coinbase. This has caused a huge outflow of capital from the industry, with Coinbase’s share price down 86% from its public offering price a year ago.
The arrival of a Blackrock ETF could be a big boon for the crypto space, providing a much-needed injection of legitimacy. But it could also cause harm to exchanges, as it would provide a low-fee, convenient and easy way for institutions and individuals to gain Bitcoin price exposure.
The ETF would have a daily creation/redemption mechanism, and it would be technically classified as a trust. However, it would still function like an ETF. People may be less inclined to trade on exchanges if they can access the same exposure through the ETF at a lower cost. It could also be seen as a safer option, as Blackrock has a great reputation amongst Wall Street capital.
An ETF could be a huge win for Bitcoin and crypto. But for exchanges, this could mean increased competition at a time when liquidity, volumes and prices are down, and layoffs and lawsuits are on the rise. The approval of the ETF is far from guaranteed and every other ETF application has been rejected to date. The crypto space will be watching with bated breath.
