BlackRock, the world’s largest asset manager, has met with the US Securities and Exchange Commission (SEC) to discuss its plans to launch bitcoin exchange-traded funds (ETFs), according to a report by BeInCrypto. The meeting, which took place on November 16, 2023, was attended by senior executives from BlackRock and SEC officials, including Chairman Gary Gensler.
BlackRock is one of the several firms that have filed applications for bitcoin ETFs with the SEC this year, hoping to tap into the growing demand for crypto exposure among investors. The firm has proposed two bitcoin ETFs: one that would invest directly in bitcoin and another that would invest in bitcoin futures contracts.
BlackRock is not new to the crypto space, as it already offers some exposure to bitcoin through its existing funds that hold shares of companies involved in the blockchain industry, such as MicroStrategy and Coinbase. The firm also has a dedicated Digital Assets team that explores the potential of crypto assets and blockchain technology.
However, launching a bitcoin ETF would be a significant step for BlackRock, as it would allow the firm to offer a more direct and convenient way for investors to access the crypto market. A bitcoin ETF would also enhance the liquidity and transparency of the bitcoin market, as well as reduce the risks and costs associated with storing and transferring bitcoin.
SEC’s Bitcoin ETF Dilemma
The SEC, on the other hand, has been reluctant to approve any bitcoin ETFs, citing concerns over market manipulation, fraud, custody, and investor protection. The regulator has repeatedly delayed or rejected the applications of various firms, including Fidelity, VanEck, WisdomTree, and Bitwise.
The SEC has only approved two bitcoin ETFs so far, but both of them are based on bitcoin futures contracts, not the underlying spot market. These are the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF, which began trading on the New York Stock Exchange in October 2023.
However, many experts and investors have argued that a spot bitcoin ETF would be more beneficial and efficient than a futures-based one, as it would track the actual price of bitcoin and avoid the complexities and costs of rolling over futures contracts. A spot bitcoin ETF would also open the door for more institutional and retail adoption of bitcoin, as well as foster innovation and competition in the crypto industry.
The Outcome of the Meeting
According to the report, the meeting between BlackRock and the SEC was cordial and constructive, but no definitive outcome was reached. The SEC did not indicate whether it would approve or deny BlackRock’s bitcoin ETF applications, nor did it provide any timeline or guidance for its decision.
BlackRock, meanwhile, expressed its confidence and optimism about the prospects of its bitcoin ETFs, and highlighted its expertise and experience in the asset management field. The firm also addressed some of the SEC’s concerns and questions, and explained how it would ensure the safety and security of its bitcoin ETFs.
The report also noted that the meeting was not a formal hearing or a negotiation, but rather an opportunity for both parties to exchange views and information. The meeting was not recorded or transcribed, and no official minutes or documents were produced.
The meeting was part of the SEC’s ongoing review process of the bitcoin ETF applications, which involves soliciting public comments, conducting market analysis, and consulting with industry experts and stakeholders. The SEC has the authority to approve or deny the applications within 240 days of their initial filing, which means that BlackRock’s bitcoin ETFs could receive a final verdict by early 2024.