Financial giants flock to Bitcoin ETF: Making money is the real deal

Financial giants investing in Bitcoin ETF to make money.

Author: George Kaloudis

Translation: BlockingBitpushNews Mary Liu

Financial institutions are taking a new look at cryptocurrencies and are flocking to them.

Last week, the news that BlackRock (BLK) had filed an application for a spot Bitcoin exchange-traded fund (ETF) ignited industry enthusiasm. This week, another large asset management company, Invesco (IVZ), re-applied for a spot Bitcoin ETF. Large ETF provider WisdomTree has also resubmitted the same application (WisdomTree’s application was initially rejected by the SEC in 2022).

Other institutions are also vying for headlines, with EDX Markets (EDX), a crypto exchange supported by Fidelity, Charles Schwab, and Citadel Securities, launching in the United States, and Deutsche Bank applying for a digital asset license in Germany.

So, institutions are back. But why did BlackRock, a $10 trillion asset management company, and Invesco, a $1.5 trillion asset management company, decide to launch a spot Bitcoin ETF at this juncture? Many have put forward conspiracy theories (some of which seem reasonable).

For example, BlackRock is supporting Coinbase for some reason, or it is acting on behalf of federal agencies to keep ordinary users from having full control of their Bitcoin, or Wall Street giants will not allow crypto companies to be too far ahead.

There are many such “conspiracy theories,” but there is a more convincing argument: Capital never fails to get along with money, and launching a spot Bitcoin ETF is a way to make money.

Take BlackRock as an example. BlackRock has clients (that’s true), who have money they want to give to BlackRock (they do), and are willing to pay BlackRock to manage it, and BlackRock listens to its clients, so it’s easy to believe that there is some demand from clients for “cryptocurrency exposure,” which makes it worthwhile to provide crypto exposure to clients. In exchange, BlackRock will of course charge a fee.

BlackRock sees a spot Bitcoin ETF as the path of least resistance to provide clients with risk exposure, which is another matter. BlackRock will only profit from the ETF if it is approved. So far, about a dozen spot Bitcoin ETF applications have been rejected by the SEC (although there is reason to believe that BlackRock’s latest application will meet the SEC’s requirements for market surveillance and disclosure).

It is certain that the SEC does not have a strong hostility towards Bitcoin, the problem lies in securities disguised as “cryptocurrencies”.

In addition, BlackRock executives did not like cryptocurrency, but time can change many things.

In July 2018, BlackRock CEO Larry Fink claimed in a Bloomberg TV interview that customers had zero interest in cryptocurrency. When asked if it was necessary to prepare for the day when customers want to get involved, Fink replied “not at this time”. A few months ago, Larry Fink also referred to the Bitcoin protocol as a “money laundering index” and believed that “Bitcoin only shows you how much demand there is for money laundering in the world”.

Fast forward to June 2023, Larry Fink seems to have gone from a skeptic of Bitcoin to a “savior” of the crypto industry. If the spot ETF is given the green light, it is expected that BlackRock will sponsor other crypto products in the future.

According to data compiled by Bloomberg Intelligence, the SEC has a maximum of 240 days to decide on BlackRock’s application. Nate Geraci, President of The ETF Store, pointed out that this investment giant “may know something that we ordinary people don’t know” about the SEC’s thoughts.

Capital is driven by profit. If BlackRock (arguably the most powerful company on Wall Street) does not have enough confidence, it will not apply for this spot Bitcoin ETF.

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