BlackRock’s Audacious Entry: Unleashing The Bitcoin Beast

Moonrock Capital
5 min readJun 21, 2023

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In a riveting twist of events, the cryptocurrency realm finds itself abuzz with BlackRock’s unexpected foray into the scene. This distinguished financial behemoth, overseeing a staggering $9.5 trillion in assets, has set tongues wagging by filing an application for a Bitcoin exchange-traded fund (ETF). Such a bold move during this era of rigorous regulatory scrutiny has left many pondering the motives behind this audacious stride. As the discourse unfolds, it is imperative to explore the potential ramifications of BlackRock’s application, drawing parallels to past developments like the advent of GLD, which granted investors convenient access to the world of gold.

Unveiling BlackRock’s Bitcoin ETF Application

BlackRock’s audacious appeal to the U.S. Securities and Exchange Commission for a Bitcoin ETF has sent shockwaves rippling through the crypto industry. Although technically categorized as a trust, pundits argue that it functions as a bona fide ETF, setting the stage for an ostensibly significant breakthrough.

Source: https://twitter.com/EricBalchunas/status/1669495679004147714

This application follows a string of dismissals faced by other Bitcoin ETF hopefuls, underscoring BlackRock’s distinctive position as a potential game-changer in the cryptocurrency landscape.

BlackRock’s ETF Track Record

BlackRock’s formidable reputation precedes it when it comes to securing SEC approvals for its ETF propositions. This institution boasts an astounding track record of 575–1, with the majority of its proposals earning the Commission’s benediction.

Source: https://twitter.com/EricBalchunas/status/1669691447996456963

This remarkable achievement stands in stark contrast to the multitude of rejections faced by other Bitcoin ETF aspirants, including esteemed asset managers such as VanEck, Ark Invest, and Bitwise. Backed by its extensive expertise and commendable track record, BlackRock’s application introduces an unprecedented level of credibility to the Bitcoin ETF race.

The Regulatory Landscape and BlackRock’s Timing

BlackRock’s decision to pursue a Bitcoin ETF arrives at a peculiar juncture, with the SEC intensifying its regulatory crackdown on the cryptocurrency sector. The Commission has initiated lawsuits against numerous crypto firms and hinted at an ambience that is less than welcoming towards the industry. However, it is crucial to consider the historical backdrop. The advent of the SPDR Gold Shares (GLD) ETF, backed by State Street Global Advisors, in 2004 marked a momentous milestone in the gold market.

Source: https://twitter.com/WClementeIII

GLD provided investors with effortless access to gold exposure, paving the way for enhanced adoption and heightened liquidity. In a similar vein, BlackRock’s Bitcoin ETF application could potentially yield a comparable impact, streamlining institutional access to Bitcoin and potentially fueling broader acceptance.

The Crypto Community’s Divergent Reaction

BlackRock’s entry into the Bitcoin ETF race has triggered a mosaic of responses within the crypto community. While some perceive it as a potential catalyst for mainstream adoption and a revitalization of optimism, concerns have arisen regarding institutional hegemony and the erosion of Bitcoin’s decentralized principles. The prospect of traditional financial giants wielding substantial influence gives rise to queries about the long-term consequences for the fundamental tenets of cryptocurrencies. However, history has demonstrated that developments akin to GLD have ultimately contributed to the expansion and acceptance of gold as an investable asset. Comparable dynamics may well come into play with BlackRock’s Bitcoin ETF, potentially broadening the horizons of cryptocurrencies.

Apprehensions of Institutional Takeover

Mark Yusko, the visionary founder of Morgan Creek Capital Management, has expressed apprehensions about the burgeoning influence of institutions within the Bitcoin ecosystem. The acquisition of Xapo, a prominent institutional-grade crypto custody tool, by Coinbase raises the specter of BlackRock gaining control over a substantial portion of crypto assets in the United States. Such a scenario stirs concerns about regulatory implications and the consolidation of power in the hands of a few institutional players. However, it is worth noting that GLD’s launch did not lead to a complete takeover of the gold market by institutions. It provided investors with additional avenues to access gold, coexisting alongside traditional gold investment vehicles.

Balancing Institutional Involvement and Decentralization

Proponents argue that institutional participation in Bitcoin can foster increased liquidity, stability, and overall market maturity. They contend that the entry of a financial powerhouse like BlackRock into the Bitcoin ETF space could signify a vote of confidence from traditional finance, potentially attracting a wave of institutional investors. This influx of capital and expertise might lead to improved market infrastructure and heightened adoption. However, critics warn that excessive institutional dominance could dilute the essence of decentralization and disrupt the core principles upon which Bitcoin was built.

Conclusion

BlackRock’s application for a Bitcoin ETF marks a pivotal moment in the evolution of cryptocurrencies. As a revered financial institution with a remarkable track record in obtaining SEC approvals, BlackRock brings unparalleled credibility to the Bitcoin ETF race. While its entry has sparked both optimism and apprehension within the crypto community, historical precedents such as the launch of GLD demonstrate that institutional involvement can coexist with the decentralized nature of assets. As the regulatory landscape evolves and the crypto industry navigates uncharted waters, the impact of BlackRock’s potential Bitcoin ETF approval remains to be seen. Nevertheless, this convergence of hope and concern underscores the growing significance of cryptocurrencies in the mainstream financial world.

Who We Are

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.

Website: https://www.moonrockcapital.io

Twitter: https://twitter.com/MoonrockCapital

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.

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Moonrock Capital

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019. https://www.moonrockcapital.io