BlackRock and Nasdaq representatives met with the SEC for the second time in December on BlackRock’s proposal for a spot Bitcoin ETF. Image by 24K-Production, Adobe Stock.

BlackRock, the world’s largest asset manager, is continuing to push forward with plans to launch a spot Bitcoin exchange-traded fund (ETF). In a positive sign for the potential approval of a spot Bitcoin ETF, BlackRock met with the United States Securities and Exchange Commission (SEC) for the second time this month to discuss BlackRock’s proposed Bitcoin ETF.

SEC Engages With BlackRock and Nasdaq on Proposed Rule Change

According to an SEC memo, the December 19 meeting included BlackRock’s Head of Digital Assets Robert Mitchnick and members of the asset manager’s ETF team. Nasdaq representatives were also present, including the exchange’s VP and Chief Regulatory Officer Joseph Cusick.

The discussion centered around Nasdaq’s proposed rule change to list and trade shares of the BlackRock iShares Bitcoin Trust. This would allow the trading of the spot Bitcoin ETF on the Nasdaq exchange, utilizing existing guidelines under Nasdaq Rule 5711(d).

The SEC memo of BlackRock-NASDAQ spot Bitcoin ETF meeting.

Rule 5711(d) provides criteria for listing Commodity-Based Trust Shares, including compliance requirements for initial and continued listing. The proposed rule change seeks to satisfy these conditions.

The latest meeting happened on the same day of BlackRock’s amendment to its S-1 application, where the proposed iShares Bitcoin Trust ETF was assigned the ticker IBIT. The ETF was also changed to a cash-only structure, meaning new shares can only be created with cash, not actual bitcoin.

The SEC meeting marks increased momentum and persistence from BlackRock in getting approval for a spot Bitcoin ETF in the US. The asset manager originally filed for the spot Bitcoin ETF back in June, causing excitement in the crypto sector around the possibility.

Institutional Adoption in Focus With BlackRock Spot Bitcoin ETF

As the world’s largest asset manager, BlackRock’s efforts represent a major milestone in the potential institutional adoption and mainstream acceptance of Bitcoin. The launch of a spot Bitcoin ETF would allow both institutional and retail investors easier exposure to Bitcoin through traditional investment accounts.

Some analysts predict that the approval of a spot Bitcoin ETF could drive major capital inflows into the crypto market. It would provide investment funds and traditional finance players with regulated access to Bitcoin’s upside potential.

Other experts argue that money would likely shift from existing Bitcoin investment products to ETFs, however, rather than represent new capital. For example, assets could migrate from Bitcoin futures ETFs, Grayscale’s Bitcoin Trust GBTC, and crypto mining companies. Nonetheless, the impacts are expected to be largely bullish for Bitcoin.

Overcoming Regulatory Hurdles With the SEC

While optimism exists, regulatory approval for a spot Bitcoin ETF is still uncertain. The SEC has yet to approve such an ETF despite years of applications. Issues around crypto custody, manipulation risks, and investor protection have been cited as concerns.

Lately, the current SEC leadership under Chairman Gary Gensler has started showing more openness to engaging with crypto ETF applicants, however. The flurry of recent meetings suggests BlackRock’s spot Bitcoin ETF is gaining more serious consideration.

Additionally, a window is opening in January 2024 where the SEC could potentially approve multiple ETF applications at once according to a K33 Research report. This impending deadline may be compelling the regulator to accelerate the review process.

With BlackRock applying its immense resources and credibility, the prospect of finally overcoming regulatory hurdles looks more viable. Despite the lingering uncertainty, the new round of SEC meetings is keeping the momentum building behind a potential 2024 launch.

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