For some time, it appeared that regulators were ready to acknowledge what many investors and financial institutions view as inevitable - the rise of cryptocurrency as a legitimate, mainstream investment vehicle. And we still may be in that moment.
Blackrock, one of the biggest financial giants, has asked the SEC to offer financial products centered on crypto. Blackrock filed a bid to offer Bitcoin's first spot ETF for Bitcoin, allowing investors to essentially trade the cryptocurrency based on its current value instead of just the futures trading on Bitcoin that the federal agency approved in 2021.
After reports that the SEC had considered the plan as 'inadequate' and 'not sufficient clear and comprehensive', Blackrock returned this week with a new plan. This shows determination and is a major part of the reason why some experts believe that the SEC's failure to approve Blackrock's plan is significantly different from previous rejections. There is a belief that with some adjustments, the agency will eventually approve it.
This is the 30th crypto spot ETF plan the SEC has turned down, according to Bloomberg, and there are a growing number of voices, even within the agency itself, who say that the regulator is running out of excuses on such approvals. The fact that financial giants and long-established institutions such as Blackrock and Fidelity are seeking consent for such plans is an indication that the time for crypto to go mainstream has arrived. Even among long-established institutional investors, the crypto genie is out of the bottle, and the regulatory authorities are going to have to acknowledge that.
The market is surely feeling the time has come. In June, Bitcoin rose by at least 12%, topping $30,000 for the first time in a long time before falling in light of the pending SEC decision. But the applications keep coming, according to Bloomberg, at least three other issuers have filed similar ETF plans since BlackRock's filing.
Analysts had originally believed that Blackrock had a good chance of getting the offer approved by the SEC, especially given its nearly flawless record for ETF approvals. Blackrock's plan addressed most of the problems that the agency had raised in dozens of previous applications by other firms offering plans for spot crypto trading that were rejected, such as the speculative and potentially manipulative aspect of some crypto trading platforms. The Blackrock plan also calls for the NASDAQ to be responsible for ensuring transparency in trading.
SEC regulators are always concerned about investor safety, and experience has proven that an unregulated crypto market could lead to investor tragedy. regulators must also respect the distinctive features of crypto, such as its independence, digital nature, which attracts people to use it. The creation of a digital currency isn't going to help anyone or advance financial innovation, but limiting crypto into a digital currency is not going to help anyone or advance financial innovation.
Crypto trading could generate substantial economic growth thanks to the surge in interest in crypto by conventional finance institutions and markets, which could result in a significant surge in crypto investing, which could account for up to $15 trillion in revenue. An ETF offering would convert Crypto from a suspect, outlier method of moving money into a 'legitimate' asset. For it to happen, however, crypto must retain itsethos of being a purely digital exchange, instead of necessitated by unnecessary regulations.
Opening the Door for Cryptocurrency growth and financial innovation
When this happens, other features of cryptocurrency - including the ability to settle both domestic and international accounts without the burden of exchange rates, bank transfers and lengthy regulatory paperwork - will become evident. This is not about skirting taxes or money laundering, and you can be sure that crypto assets transferred from Blackrock accounts will be vetted as thoroughly as dollar transfers.
As more people start investing in crypto, they will be more inclined to use crypto, so fulfilling the original promise of cryptocurrency as a pure, digital method for settling debts, buying and selling assets in a safe, efficient way. As more people take advantage of cryptocurrency, advanced tools - based on artificial intelligence and other advanced technologies - will be developed, enabling users to make the most out of their investments.
The immediate solution is the SEC's approval of spot crypto trading and the market demand for it. Blackrock, Fidelity and other investors who trade these securities are not interested in the ethos of cryptocurrency; they're interested in making money, and they've determined that there's a lot of money to be made by providing services for crypto trading.
This acknowledgement by some of the biggest and most established financial firms of the potential of crypto is exactly the reason it is not going away. With the proper controls against market manipulation, there's no reason for crypto to not be utilized as a common source of trading assets. And when it does, the benefits of crypto could become clear to all investors for the first time.
Dmitry Gooshchin, COO and co-founder of Endotech.io, is leading the development of Endotech.io.