U.S. House Financial Services Committee Chair Patrick McHenry has expressed his intent to closely monitor the response of the Securities and Exchange Commission (SEC) regarding BlackRock’s application for a Bitcoin exchange-traded fund (ETF). In a tweet on June 16, McHenry emphasized that the SEC should avoid favoritism and ensure consistent decision-making. He suggested that if the SEC approves BlackRock’s application, it would need to provide an explanation for rejecting previous spot Bitcoin ETF applications from other crypto firms. Given BlackRock’s status as one of the world’s largest investment firms and its significant influence, members of the crypto community believe that the SEC will face considerable pressure to approve the application.
BlackRock submitted its application for a Bitcoin spot ETF on June 15. The custody of digital assets would be entrusted to Coinbase Custody, while the Bank of New York Mellon would hold the ETF’s fiat currency. BlackRock’s application highlights that the SEC has previously authorized unregulated spot exchange-traded products in commodities and currency markets, relying on the underlying futures market. Therefore, according to BlackRock, the spot Bitcoin market does not necessarily require regulation for the SEC to approve its proposal.
It is worth noting that the SEC has rejected more than 10 spot Bitcoin ETF applications from various firms, including Ark Invest, 21 Shares, WisdomTree, Fidelity, SkyBridge, Valkyrie Investments, and VanEck. The regulator has also hindered Grayscale Investments’ attempt to convert its Bitcoin Trust into a spot ETF. Grayscale Investments is currently challenging the SEC’s decision in court.
In these instances, the SEC has consistently cited non-compliance with specific sections of the Securities Exchange Act and a lack of measures to prevent fraud, market manipulation, and safeguard investor and public interests as reasons for rejecting the applications. However, the SEC has approved several Bitcoin futures ETFs since October 2021, including ProShares Bitcoin Strategy (BITO) and Valkyrie Bitcoin Strategy ETF (BTF).
