On this special edition of ETF Prime, Bloomberg’s research analyst James Seyffart and VettaFi’s financial futurist Dave Nadig go in-depth on the recent wave of filings for spot bitcoin ETFs and predict what comes next.
The Greatest Show in Town
ETF Prime host Nate Geraci was originally going to record a “best of” episode after the long holiday weekend. But instead, he decided to do a full deep dive into what’s going on with spot bitcoin ETFs.
In June, BlackRock filed for a bitcoin ETF. Since then, many issuers have submitted filings for their own Bitcoin spot ETFs, including Bitwise, WisdomTree, Invesco, Valkyrie, and Fidelity.
So, why is there so much passion around the topic of a bitcoin ETF? According to Nadig, it’s mainly because of two things.
“One is, anytime there’s a ‘will they/won’t they’ with the SEC, everybody comes out of the woodwork,” Nadig said. “We did this with 6c-11, we did this with nontransparent active.” So, everyone’s tuning in to watch “the Greatest Show in Town.”
The other thing is that “there’s layers of potential hypocrisy here,” which is “like catnip for Twitter and social media.” The “potential hypocrisy” could come if the SEC approves BlackRock’s proposed bitcoin ETF.
But there’s another hypocrisy that’s already playing out. Per Nadig, the hypocritical “back and forth between the futures and the spot” makes very little sense.
“So, anytime that there’s these apparent disconnects and hypocrisies, I think it’s almost inevitable that the internet’s going to get interested,” Nadig added.
Seyffart agreed that the SEC’s “logic doesn’t make a lot of sense.” But from a news perspective, the topic is going to get a lock of clicks.
Call Coinbase by Its Name
Geraci cited a story from the Wall Street Journal revealing that the SEC found the recent applications for spot bitcoin ETFs inadequate. Per the Journal, the SEC returned the filings because the exchanges didn’t name which spot bitcoin exchange with which they expect to have a “surveillance-sharing agreement.”
Seyffart had some theories as to why none of the filings mentioned Coinbase by name. First off, “BlackRock just wanted to get this out and they wanted to make sure they were first.”
“The real benefit here is that they could be first ahead of everyone else,” Seyffart said. “The first-mover advantage is wild.”
Second, Seyffart has a hunch that Coinbase doesn’t want to be named in BlackRock’s filing just yet. However, he admittedly doesn’t quite understand Coinbase’s thought process. Perhaps the crypto community takes issue with something called a “surveillance-sharing agreement,” as it goes against the crypto ethos.
“I don’t know why they didn’t do it aside from the fact that I heard they were worried about pushback from the crypto community,” Seyffart said.
Nadig agreed. “The whole issue of ‘What does BlackRock know?’ is a fascinating conspiracy theory,” VettaFi’s financial futurist said. “But I think the most likely answer is Coinbase’s lawyers didn’t want their name in it.”
Since Coinbase is currently in the middle of lawsuits, it’s likely that it’s looking to avoid any pushback or attention.
“I think it’s unlikely… that BlackRock genuinely knows something and knew the magic words to put in the filing to get it sailed through,” Nadig added. “I’m just not that much of a conspiracy theorist.”
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