Bitcoin Spot ETF Landscape: BlackRock Emerges as the Dominant Force

• BlackRock has resubmitted its proposal for a Bitcoin spot ETF, joining forces with Coinbase in a potential game-changing strategy.
• The unique aspect of BlackRock’s resubmission is its active surveillance sharing agreement with Coinbase, which may provide a critical edge over other contenders.

BlackRock’s Reinvigorated Bitcoin Spot ETF Bid

BlackRock, the world’s top asset manager, has revitalized the crypto community with its resubmission of a Bitcoin spot ETF proposal. The move, which made public BlackRock’s strategic collaboration with Coinbase, could potentially propel BlackRock ahead of its competitors in the pursuit for the first Bitcoin spot ETF.

Is BlackRock’s Proposal Robust Enough?

A pertinent question arises—does BlackRock’s filing sufficiently address the Securities and Exchange Commission’s (SEC) surveillance sharing agreement (SSA) concerns? Industry experts opine that BlackRock and Coinbase’s surveillance pact might be a stepping stone for regulatory green light, indicating a significant advantage over competitors such as ARK, Fidelity, Invesco, Bitwise, and WisdomTree.

Whereas these competitors merely plan to negotiate an agreement with Coinbase, BlackRock has already implemented one, which might explain why BlackRock postponed its resubmission. The move could potentially put BlackRock in pole position for the first approval and give it the critical first-mover advantage.

The Impact of Coinbase’s Dominance

Another vital aspect for SEC will be whether Coinbase, holding a 56% majority in dollar-to-bitcoin trading on U.S. platforms, represents a “market of substantial size”. While some experts believe that the current trading volume on Coinbase could meet the SEC’s criteria, others suggest that the SEC’s decision will depend on its propensity to approve a Bitcoin ETF and its definition of a regulated market.

BlackRock’s Strategic Edge: The SSA Agreement

The existence of an SSA between BlackRock and Coinbase has put BlackRock in a strategic position in the race to launch a Bitcoin spot ETF. Although Bitwise Invest and ARK have older applications than BlackRock’s, the absence of an actual SSA agreement in their applications potentially gives BlackRock a strategic edge.

Furthermore, Grayscale’s ongoing lawsuit against the SEC, despite holding the world’s largest Bitcoin fund, doesn’t necessarily guarantee the launch of a spot ETF even with a victory. In contrast, BlackRock’s SSA with Coinbase, despite certain concerns about whether Coinbase represents a market of “sufficient size”, sets a unique precedent that could sway the outcome in their favor.