BlackRock Leaps Ahead in the Race for Bitcoin Spot ETF Domination

The decision made by investment asset management firm BlackRock to refile its spot Bitcoin (BTC) Exchange Traded Fund (ETF) application has sparked excitement and speculation in the crypto industry. Many believe that BlackRock’s strategic partnership with American cryptocurrency exchange Coinbase and a potentially crucial gambit might allow the top investment manager to win the first Bitcoin spot ETF race.

The United States Securities and Exchange Commission (SEC) stated last Friday that the recent applications for spot BTC ETF including that of BlackRock were inadequate. More so, the regulator pointed out that the applications lack clarity and were not comprehensive as they didn’t provide enough details concerning the surveillance data sharing agreements (SSAs) including which spot Bitcoin exchanges would be utilized.

Hence, the applications were denied but the opportunity for the asset managers to revise their applications and resubmit them was made available. Now that Nasdaq has resubmitted BlackRock’s Bitcoin ETF application to the SEC, the question in the hearts of many is whether the new filing provides enough detail to address SEC’s concerns about SSAs. Particularly, Sam Callahan, senior analyst at Swan Bitcoin has questioned whether BlackRock can fulfill this SEC requirement.

In response, Bloomberg Intelligence expert James Seyffart said with the fact that SSAs are common practice in the industry, he believes that BlackRock and Coinbase’s joint surveillance agreement would suffice to earn the SEC’s regulatory approval. Compared to its current competitors (ARK Invest, Fidelity, Invesco, Bitwise, and WisdomTree) that are looking forward to a potential agreement with Coinbase, BlackRock is already in actual agreement with the exchange.

Spot Bitcoin ETF: BlackRock Outrunning its Peers

The agreement between BlackRock and Coinbase goes as far back as June 16th when the asset manager decided to leverage the trading platform’s custodial services for its spot BTC ETF. With this strategy, BlackRock has aced its counterparts and has successfully positioned itself as the front-runner in the race for the first spot Bitcoin ETF product. It is believed that BlackRock’s delay in reapplying may have been intentional to catch its rivals by surprise and clench the first mover advantage.

President of the ETF Store and co-founder of ETF Institute Nate Geraci said “There’s a reason the word ‘agreement’ is in surveillance sharing agreement…There needs to be a formal arrangement in place.” He added that “expecting to agree” is not the same as having an actual agreement.”

While BlackRock resubmitted its application on June 29th, Bitwise Invest and NYSE were ahead with a June 28 filing. It is, however, a shame that they do not “yet” have the surveillance sharing agreement language in their application, according to Seyffart. Again, there is the question of whether Coinbase, with its 56 percent dominance in dollar-to-bitcoin trading on U.S. platforms, would constitute a “market of substantial size” based on the SEC’s definitions.

Geraci believes that Coinbase’s current trading volume is enough to meet the regulator’s requirement.