Former BlackRock Director Predicts SEC Approval for Bitcoin ETF in 3-6 Months
By Noah Washington October 16, 2023
- Former BlackRock director Steven Schoenfield has predicted SEC approval of a Bitcoin spot ETF within 3-6 months
- There is growing acceptance of crypto among traditional financial institutions
- Competition expected between BlackRock and other firms for the first SEC-approved Bitcoin ETF
Steven Schoenfield, a former managing director at BlackRock and current CEO of MarketVector Indexes, boldly stated that he believes the SEC will give the green light to a Bitcoin spot ETF within the next three to six months.
This prediction was made during an October 3 panel discussion at CCData's Digital Asset Summit in London, where Schoenfield was joined by another ex-BlackRock director, Martin Bednall, now serving as the CEO of Jacobi Asset Management.
SEC Invited Public Comments
Schoenfield's timeline for SEC approval reflects a growing sense of optimism within the crypto community. While many have been eagerly awaiting the SEC's verdict on Bitcoin ETF applications, there is a sense that the time may be approaching sooner than previously thought.
This perspective is supported by comments made by Bednall, who speculated that the SEC would likely approve all ETF applications simultaneously to prevent granting any entity a first-mover advantage. The SEC's recent decision to delay rulings on pending ETF applications is noteworthy. Instead of outright rejection, they have invited public comments, signaling a more open dialogue and potentially greater receptiveness to Bitcoin ETFs.
Additionally, the SEC's loss in the Grayscale lawsuit suggests that they may soon allow the conversion of the Grayscale Bitcoin Trust into an ETF, further indicating a shift in regulatory sentiment.
BlackRock Leads the Charge
At the heart of the discussion lies the role of BlackRock, a financial juggernaut managing a staggering $9.42 trillion in assets. BlackRock's impressive track record of securing SEC approvals for various ETFs, with a remarkable 575-1 success rate, positions it as a frontrunner for obtaining approval for a Bitcoin spot ETF. This prediction is a far cry from 2017 when BlackRock's chief, Larry Fink, notoriously referred to Bitcoin as an "index of money laundering".
Bitcoin price the past five years. Source: CoinGecko
Recently, Fink's perspective on cryptocurrencies has undergone a transformation. In the summer of 2023, he appeared on FOX News, where he acknowledged that crypto is effectively "digitizing gold in many ways." The significant shift in tone from a prominent figure in the financial world indicates the growing acceptance and mainstream integration of cryptocurrencies.
Bednall believes BlackRock's strong brand and ample resources will give it a crucial early lead if the SEC starts approving Bitcoin spot ETFs. However, Schoenfield had a more nuanced take. Schoenfield says while BlackRock may try to control the market, 6-9 other firms that are more engaged with crypto have also applied. So even though BlackRock has filed, these crypto-native firms could provide fierce competition.
Bitcoin ETFs and the SEC's Concerns
The SEC has been hesitant to approve Bitcoin ETFs due to various concerns. One of the main concerns is the potential for market manipulation, as the cryptocurrency market is largely unregulated and susceptible to price manipulation. Another concern is the lack of adequate custody solutions for holding and safeguarding bitcoin, which could put investors' assets at risk.
Additionally, the SEC is worried about cybersecurity threats, as hackers have targeted cryptocurrency exchanges and wallets in the past. The SEC's hesitation is also influenced by the potential shift in the balance between retail and institutional investors in the cryptocurrency market. If a Bitcoin ETF is approved, it could lead to increased institutional participation, which could significantly impact market volatility, liquidity and overall growth.
The financial implications of a Bitcoin ETF approval are significant. Schoenfield's estimate suggests that the approval of a spot Bitcoin ETF may lead to an inflow of $150 to $200 billion into bitcoin investment products over a three-year period. This infusion of capital could potentially double or even triple the assets under management in current bitcoin products.
Meaning for Crypto and Traditional Finance
The forecast for SEC approval of a Bitcoin spot ETF in the next three to six months, as predicted by Schoenfield, is a tantalizing possibility. The insights provided by the ex-BlackRock directors, including Bednall, highlight the changing dynamics of both the crypto and traditional finance worlds.
The potential approval of a Bitcoin ETF by the SEC is not just about expanding investment opportunities; it represents a pivotal moment in the convergence of the digital and financial worlds.
The diverse opinions of ex-BlackRock directors, along with the competitive landscape and financial implications, underscore the significance of this development. As the crypto landscape continues to evolve, the SEC's role in shaping the future of Bitcoin ETFs will be closely monitored, with the entire financial industry on the edge of its seat, awaiting the anticipated impact of a spot Bitcoin ETF approval on the market.