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17th June 2023 > > Blackrock again.


tl;dr

A closer look at the proposed Blackrock BTC ETF, and how institutional investors might respond.


Market Snap








Market Wrap

The prospect of a spot based BTC ETF is having a positive impact on prices, but potentially this is just the start.


Curious Cryptos’ Commentary – Laser Digital Investor Survey

Laser Digital, part of the Nomura banking group, released a survey in April of more than 300 institutional investors with $4.9 TRILLION of assets under management. That’s about half a Blackrock.


90% of those polled said that the backing of a large TradFi firm is a prerequisite for a BTC investment vehicle. Well, that Blackrock ETF we looked at yesterday will do that for you.

96% of those polled saw BTC as an investment diversification opportunity.


A 1% allocation of just this very small subset of investment money would nearly double the market cap (and hence the price) of BTC.


Curious Cryptos’ Commentary – That Blackrock ETF

We won’t get a response from the SEC regarding Blackrock’s application for spot BTC ETF for some months, but I will draw your attention to one very specific element of this proposed new product.


The CCC commented yesterday that the SEC had rejected all previous applications on the grounds that the spot price of BTC could be subject to market manipulation. If so, this would also be true of the approved futures based BTC ETFs, but this glaring anomaly appears to have been ignored by the regulators.


Blackrock’s application address this very specific issue:



Pages 20 through to 25 present a detailed analysis of this inconsistency and presents cogent arguments as to why the SEC is wrong on this point.


This issue is addressed again on pages 33 to 35, but the killer section is on page 36 “Other Means to Prevent Fraudulent and Manipulative Acts and Practices”. The proposal includes a “surveillance-sharing agreement” for which the exchange (Nasdaq) will sign agreements with one or more centralised cryptocurrency exchanges for access to prices and volumes of spot trades.


The remainder of the other 111 pages is not of great interest to us at present.


Regarding the timing of the SEC decision, the SEC initially has 45 days to respond but can extend that to 90 days if it wishes to do so. I believe the SEC, under special circumstances, can keep extending up to 240 days, but I am not entirely sure on this point. If anyone else knows, please share your wisdom.


This puts the SEC in a bit of a bind.


Be in no doubt that Blackrock carries political clout. Be in no doubt it expects to get approval for a spot BTC ETF. Be in no doubt that the time and money being invested in this process is significant and is only in response to client demands.


The SEC may reject this proposal, but it will have to engage in constructive discussions with Blackrock as to how to mitigate the concerns it has expressed about the potential for market manipulation. This will also allow the SEC to approve a spot BTC ETF without losing face.


At some point in the relatively near future I am quietly confident that Blackrock will win the day. This will be a far bigger boost to BTC adoption as an investment opportunity for retail and institutional investors than the approval of the first futures based BTC ETF that fuelled the rally to almost $70k.

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