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Recent events reveal an increasing surge of interest from prominent U.S. financial institutions in the cryptocurrency market, notably Bitcoin. The trigger for this floodgate of enthusiasm appears to be BlackRock, the world's largest asset management firm, boasting over $9 trillion under its care. In mid-June, BlackRock threw down the gauntlet, filing a spot Bitcoin exchange-traded fund (ETF) application with the U.S. Securities and Exchange Commission (SEC).
BlackRock's daring move sparked a domino effect of similar applications, despite the history of past refusals from the SEC. This rush of interest also resulted in a significant Bitcoin price surge, pushing it over the $30,000 mark.
An ETF functions as an investment instrument that reflects the value of the underlying asset it represents. The concept of a Bitcoin ETF would enable investors to dabble in the lucrative world of cryptocurrencies without actually purchasing and storing digital currencies. It provides an escape from the technical intricacies tied to the management of private keys, wallets, and understanding the operations of crypto exchanges.
Although the SEC has historically declined numerous spot Bitcoin ETF applications, citing concerns over anti-fraud and investor protection, BlackRock's application has sparked a renewed sense of optimism among traditional U.S. firms. Simultaneously, Invesco, an investment management firm, partnered with Galaxy Digital and launched its second Bitcoin ETF application. Valkyrie filed for the Valkyrie Bitcoin Fund, following its previous rejection in late 2021.
VanEck did not shy away from reentering, refiling its application in late June after two previous attempts. Fidelity Digital Assets joined the race, modeling their filing closely on BlackRock's application. Cathie Wood's Ark Invest and 21Shares, a Swiss ETF provider, made a third attempt to secure the go-ahead for the ARK 21Shares Bitcoin ETF in late April.
