IS THERE OR NOT THERE IS THIS 10 #BTC ETF? Today we will enter an epic scenario where two financial titans, Ark Invest and BlackRock, fight for a common dream: launching a Bitcoin ETF before the SEC. However, the truth goes further, as there are nuances that differentiate the requests of these two financial powers. WHO WILL WIN? WE ALL SUSPECT IT AND THE SEC HAS BEEN DELAYING IT.
WE KNOW THAT Ark Invest has challenged established conventions and plays within the rules but BlackRock has taken boldness to a level WHERE THERE IS NO COMPETITION.
HOW WOULD A BITCOIN SPOT ETF WORK?
A spot Bitcoin ETF would function as an investment fund that tracks the price of Bitcoin in real time. This type of ETF would allow investors to buy and sell shares on the stock market, similar to how they would buy and sell shares of a company. The value of the shares of a spot Bitcoin ETF would be backed by the value of the underlying assets, i.e. Bitcoin itself. Therefore, the value of the ETF would fluctuate as the price of Bitcoin increases or decreases.
WHAT COULD BE AN IMMEDIATE EFFECT OF THE APPROVAL OF A BTC SPOT ETF?
The immediate impact will be a massive increase in liquidity and institutional participation. The approval of the Bitcoin spot ETF will open the floodgates for large investors and hedge funds to dive into the world of cryptocurrencies with renewed confidence.
Market volatility will be influenced as the influx of large-scale institutional capital will stabilize prices and reduce the uncertainty that has been characteristic of the cryptocurrency space. Retail investors will also benefit as they will have access to a safer and more regulated way to invest in Bitcoin.
Furthermore, the approval of the Bitcoin spot ETF will mark a paradigm shift in the perception of cryptocurrencies, elevating them to the status of a legitimate and respectable asset class. This official recognition by the SEC will open the doors to greater adoption and widespread acceptance of cryptocurrencies in the mainstream.
ABOUT ARK INVEST
Ark Invest is an investment firm specializing in innovation and disruptive technology, founded by Cathie Wood, a renowned bitcoin advocate. On June 28, 2023, Ark Invest filed with the SEC an amended application to create a bitcoin ETF called ARK 21Shares Bitcoin ETF, in partnership with 21Shares, a Swiss company that already offers several listed cryptocurrency products in Europe.
IMPROVED PROPOSAL FROM ARK INVESTMENT
Ark Invest's application has some particularities that differentiate it from other similar proposals that have been submitted or rejected by the SEC in recent years. These are some of the points that Ark Invest modified:
- The ETF will use the S&P Bitcoin Index, which was recently launched by leading stock index provider Standard & Poor's. This index is based on the prices of three regulated and audited trading platforms: Coinbase, Kraken and Bitstamp. Ark Invest believes this index offers greater transparency, integrity, and reliability than other indices used by other bitcoin ETF applicants.
- The ETF will have an annual fee of 0.95%, making it the cheapest bitcoin ETF on the market. Most bitcoin ETFs offered in other countries have fees above 1%. Ark Invest argues that this fee is competitive and reflects the costs associated with managing the fund and securing the underlying bitcoins.
- The ETF will be physically backed by bitcoins, meaning each share in the fund will represent a fraction of a real bitcoin. The bitcoins will be held in custody by Coinbase Custody Trust Company, an entity regulated and insured by the Federal Deposit Insurance Corporation (FDIC). Ark Invest claims that this structure ensures maximum security and liquidity for ETF investors.
- The ETF will target both retail and institutional investors as it will be listed on the New York Stock Exchange (NYSE) under the symbol ARKB. Ark Invest expects the ETF to appeal to a broad spectrum of investors interested in exposure to bitcoin as a store of value, a hedge against inflation and a way to diversify their portfolios.
In this context, Cathie Wood shows her letter of inclusivity in her application, being aimed at different types of investors and including Coinbase as a custodian of Bitcoin. This inclusion was made by other applicants, making COINBASE a very important company as a custodian of BTC within the context of these approvals.
ABOUT BLACKROCK
For its part, BlackRock is the largest asset manager in the world, with UNCOUNTABLE trillions of dollars under its management. Although its CEO, Larry Fink, has expressed skepticism about bitcoin in the past, the firm has recently shown greater interest in the cryptocurrency market.
BLACKROCK PROPOSAL
BlackRock's application has the following features:
- The ETF will use the “in-kind” model for its Bitcoin Spot ETF. A type of exchange-traded fund that directly owns BTC as an underlying asset. This would be directly backed by the real-time price of Bitcoin, meaning investors could gain exposure to Bitcoin's performance without owning the cryptocurrency directly.
- The ETF will have an annual fee of 0.88%, which places it in the average of global equity ETFs. BlackRock maintains that this fee is reasonable and in line with the value the fund offers to investors seeking indirect exposure to the cryptocurrency market.
- The company is the one that buys or sells an equivalent amount in BTC when an investor purchases shares of the ETF on the open market.
- The ETF will primarily target institutional investors as it will be listed on the Nasdaq Global Market under the name iShares Bitcoin Trust and its symbol is IBTC1.
This is one of the favorites to get your ETF approved
LATEST UPDATES NOVEMBER AND DECEMBER 2023 FOR THE DECISION OF JANUARY 10, 2024
In November 2023, BlackRock updated its Bitcoin ETF application by, among other things, changing the proposed ETF's ticker from $GBTC to $BTC and removing pages related to risk disclosures.
In December 2023, BlackRock and Bitwise filed amendments to their applications with the United States Securities and Exchange Commission (SEC).
BlackRock's updates include:
Change the ticker of the proposed ETF from $GBTC to $BTC
Remove pages related to risk disclosures
Adapt your model to the requests of the SEC to be able to have your ETF approved as soon as possible
The cash creation model is a pretty important aspect. In this model, the “authorized participant” deposits cash into the ETF equal to the value of the units being created. The fund then uses this cash to purchase the asset. THIS IS AN AMENDMENT THAT WILL PLEASE THE SEC BECAUSE OF THE ISSUE OF TRANSPARENCY REGARDING THE HANDLING OF SUCH TRANSACTIONS.
On January 5, the Nasdaq Stock Exchange filed 19b-4 amendments to exchange filings, signaling potential approval for the inclusion of a spot Bitcoin exchange-traded fund (ETF).
ON December 28, 2023, ARK Invest filed an amendment to the S-1 registration statement for its Ark 21Shares bitcoin ETF. The amendment focused on authorized participants. (GRAYSCALE ALSO DID THE SAME WITH HIS REQUEST)
CONCLUSIONS
In conclusion, there are currently 13 BTC ETF approval requests whose response is expected between January 8 and 10, 2024.
All proposals have amendments to LIKE the SEC since this approval will be seismic both for the company or group of them that achieve a first and for the cryptocurrency market itself.
Imagine for a common citizen who knows nothing about BITCOIN being able to buy one share or several of a BTC ETF but without buying it directly and also because it is a BTC ETF he could be reimbursed for the same BTC.
FINAL COMMENT: THE ARMED
WHAT THE SEC NO LONGER HAS IS TIME, ALTHOUGH IT COULD ALWAYS DELAY ITS RESPONSE WAITING FOR A BETTER OUTLOOK FOR THE DOLLAR OR A BETTER POSITIONING WITHIN THIS MARKET WHICH WILL SOON BE REPLACED BY NEW SYSTEMS THAT USE ARTIFICIAL INTELLIGENCE TO DO WHAT NOW IT IS DONE THROUGH the blockchain.
For example, BlackRock has opted for a radically innovative investment strategy. PROPOSES an artificial intelligence algorithm that analyzes market trends in real time and automatically adjusts the ETF portfolio to maximize returns.
Who will the SEC side with in these scenarios? Personally, I still believe that BlackRock will be the one to benefit this time, and is taking a risk to give this ETF a touch of traditional finance through its In-kind model approach with in-kind reimbursements, bold mechanisms for both purchase and for their own investments with AI and above all scratching their back by taking into consideration each of the details that the SEC has been bothered by regarding the non-compliance recorded by large crypto companies. (pure audacity).
IS THIS 10 ETF OR NOT?
These are reading times.
#bitcoin #SEC’s #BLACKROCK #ARKInvest
