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Tech Roundup
August 2023
European Bitcoin Spot ETF May Boost Global Crypto Demand
Last week marked a significant moment in European cryptocurrency history, as Jacobi Asset Management unveiled its Bitcoin spot exchange-traded fund (ETF), the first of its kind in the region. This move is the latest indicator of Europe's continuous efforts to blend cryptocurrency assets with conventional financial tools. Meanwhile, the U.S. Securities and Exchange Commission (SEC) has been noticeably slower, postponing similar application processes.
Though the U.S. isn't entirely stagnant in this area, Eric Balchunas, Bloomberg's senior ETF analyst, noted that Bitcoin futures ETFs are available in the U.S. Still, their combined assets under management (AUM) are roughly around $1 billion. He remarked on TechCrunch's Chain Reaction podcast, "While futures exist, the true prize is the spot ETF for Bitcoin.”
The critical distinction is that a spot ETF acquires and retains the actual assets, making it a more favourable method than futures-based ETFs. Using the gold market as an analogy, Balchunas mentioned that spot gold ETFs have dominated gold ETF transactions. With a regulatory green light, Bitcoin could experience a similar trading pattern.
The potential financial implications are enormous. Balchunas emphasized the intense competition among nearly 10 companies vying for the first U.S. Bitcoin spot ETF's approval. BlackRock, with an impressive AUM exceeding $9 trillion, introduced its proposal this past June.
Furthermore, in 2022, BlackRock collaborated with Coinbase to facilitate cryptocurrency access for its institutional clientele. This partnership subsequently led to the launch of BlackRock's exclusive spot Bitcoin trust for institutional U.S. investors.
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See our workSpeculation remains regarding the SEC's stance on approving a Bitcoin spot ETF. "The real questions are when, how many, and if they will approve," Balchunas stated. Current predictions by Bloomberg analysts give a 65% likelihood of at least one approval by year's end, with prospects looking even brighter for the following year.
Balchunas believes the trajectory is clear. While it may not revolutionise the crypto landscape, it would provide an entry point for a substantial amount of funds that typically might not venture into Bitcoin, approximating the $30 trillion managed by American financial consultants.
In essence, a Bitcoin spot ETF can serve as a conduit linking trillions to the crypto world. As Balchunas aptly said, "While not all will venture across, there will undoubtedly be notable movement."
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