Bitcoin ETFs might come up at Thanksgiving — here’s what to say

“So I heard BlackRock launched a bitcoin ETF,” your uncle might say at the Thanksgiving table.

How will you respond?

Well, first you can clarify that he (let’s call him Jim) means an ETF, or exchange-traded fund. And while the asset management giant indeed wants to bring such a product to market, it does not yet have approval.

“Oh, I see,” Uncle Jim says as he collects another forkful of mashed potatoes. “I can’t say I know much about it beyond all the headlines.”

He’s right — the story has been the subject of numerous stories in recent months. Yet, misconceptions persist.

BlackRock is not the only one pursuing a bitcoin ETF. About a dozen companies — including Ark Invest and 21Shares, as well as Fidelity, Invesco and Bitwise — have similar proposals before the US Securities and Exchange Commission.

Grayscale Investments has said its Bitcoin Trust (GBTC) is ready to operate as an ETF upon receipt of necessary regulatory approvals.

Your dad’s brother then asks: “So, do you think this whole bitcoin ETF thing will happen then? And what’s the big deal anyway?”

Read more: To gauge impact of bitcoin spot ETF, analysts look to gold

Feel free to opine on the topic if you wish. But here are some facts to have at the ready.

First, the SEC has consistently blocked bitcoin ETFs from coming to market for a decade or so. These funds, if approved, would hold BTC directly and give investors exposure to the asset within an investment vehicle accessible via traditional brokerage accounts.

ETFs — which hold roughly $7 trillion in assets — are a tool used by retail investors and financial advisers alike.

Bloomberg Intelligence analysts say they think the chance of spot bitcoin ETF approval by Jan. 10 — the SEC’s deadline to rule on a bitcoin ETF proposal by Ark Invest and 21Shares — is 90%.

Since it feels like everyone is asking. Events of the last few days haven’t changed my & @EricBalchunas’ odds. We can’t go any higher than 90% by Jan 10th. That said, things are continuing to move forward in our view.

— James Seyffart (@JSeyff) November 21, 2023

“But what are they basing that on?” Uncle Jim asks. “Why would the SEC all of a sudden approve a bitcoin ETF?”

There are a few factors at play here, and you could explain — if he has the patience to listen, since Ol’ Jim’s eyes may have found the Lions game on the television behind you. Perhaps Jared Goff connected with Amon-Ra St. Brown for a go-ahead score. When did Detroit’s football team get good?

But back to bitcoin ETFs — what’s different now?

BlackRock filing for a spot bitcoin ETF in June certainly turned heads. The company manages more than $9 trillion in assets and has only ever had one product proposal denied by the SEC in nearly 600 attempts, according to Bloomberg Intelligence data. BlackRock’s push spurred a new wave of bitcoin ETF proposals across the financial sector.

Elsewhere, Grayscale won a court case against the SEC in August — a ruling that limits the criteria on which it would be able to deny the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF, should it try to do so again.

The SEC had a chance to challenge the legal decision as late as last month, but opted not to.

Beyond that, fund issuers have amended their bitcoin ETF proposals, signaling an ongoing dialogue with the SEC.

– This still is “in-kind” creation/redemption, but they’ve introduced Coinbase as prime broker to assist in this process. So APs can simply transfer balances held at the PB to create rather than transfer BTC on-chain.

— Scott Johnsson (@SGJohnsson) November 20, 2023

21Shares president Ophelia Snyder said during a Monday interview on Bloomberg TV that there has been a “pattern break” as issuers have begun to offer more information on what these products would look like.

“That’s really positive, because, very candidly, change in behavior might actually result in a change of outcome,” Snyder added.

As recently as Monday, members of the SEC’s division of trading and markets met with executives from BlackRock and Nasdaq about the proposed iShares Bitcoin Trust.

“I guess only time will tell,” Uncle Jim concludes at the dinner table, seemingly ready to move on to dessert.

Right he is.

The table topic indeed shifts. Your sister was asked about her love life. Someone just brought up the 2024 presidential election.

Is it time for pie yet?

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