The race for the first U.S. Bitcoin exchange-traded fund (ETF) heats up, with Wall Street giants BlackRock and Van Eck making eleventh-hour amendments to their applications just before the SEC’s deadline for consideration in January 2024. Both firms are considered frontrunners in this highly anticipated battle, and their recent moves could offer clues about their strategies and potential advantages.
Van Eck Emphasizes Cash Settlement:
Van Eck’s revised S-1 form clarifies that authorized participants (APs) will exclusively use cash for both buying and selling shares of the ETF. This aligns with the SEC’s apparent preference for physically settled ETFs, which aim to directly hold Bitcoin instead of derivatives. By catering to this preference, Van Eck potentially strengthens its case for approval.
BlackRock Names Key Partners:
BlackRock’s updated filing reveals Jane Street and JP Morgan Securities as authorized participants in its proposed ETF. These heavyweight financial institutions add credibility and liquidity to BlackRock’s application, potentially increasing its appeal to the SEC. Bloomberg ETF analyst Eric Balchunas, referring to BlackRock’s move, declared “we have our first horse […] at the starting gate,” suggesting the asset manager could be poised for a strong finish.
The Road Ahead Remains Uncertain:
Despite these strategic maneuvers, the SEC’s decision on Bitcoin ETFs remains shrouded in uncertainty. The commission has repeatedly rejected applications in the past, citing concerns about market manipulation and investor protection. However, recent regulatory developments, including the SEC’s approval of a Bitcoin futures ETF, offer a glimmer of hope for proponents of physically settled ETFs.