US House Financial Services Committee Chairman Patrick McHenry said he would watch “closely” how the Securities and Exchange Commission (SEC) responds to BlackRock’s application for a spot Bitcoin ETF in a June 16 tweet.
McHenry noted that while the decision now rests with SEC Chairman Gary Gensler, the financial regulator “shouldn’t pick winners and losers based on inconsistent factors.”
The lawmaker’s comment suggests that the SEC should explain why it rejected all previous mock Bitcoin ETF applications from other crypto companies if it approves BlackRock’s.
Given BlackRock’s status as one of the largest investment firms in the world and its clout, several members of the crypto community to believe the SEC will be under intense pressure to approve the application.
BlackRock’s ETF application
On June 15, BlackRock filed for a Bitcoin spot ETF. Coinbase Custody would act as the custodian of the digital assets, while the Bank of New York Mellon would hold the ETF’s fiat.
According to his application, the SEC previously approved unregulated spot exchange traded products in the commodity and currency markets by relying on the underlying futures market. Thus, “the sizeable regulated market does not require the spot bitcoin market to be regulated before the Commission approves this proposal.”
SEC has a history of rejecting Bitcoin spot ETFs
The Commission has rejected more than 10 spot Bitcoin ETF applications from various companies, including Ark Invest, 21 Shares, WisdomTree, Fidelity, SkyBridge, Valkyrie Investments, and VanEck.
In addition, the regulator has frustrated Grayscale Investments’ attempt to convert its Bitcoin Trust into a spot ETF. The crypto investment firm is currently challenging the SEC’s decision in court.
In these cases, the Commission has consistently maintained that these companies’ applications failed to comply with certain parts of the Securities Exchange Act and were not intended to prevent fraud and market manipulation or to protect investors and the public interest.
However, the SEC has approved several Bitcoin futures ETFs since October 2021, including ProShares Bitcoin Strategy (BITO) and Valkyrie Bitcoin Strategy ETF (BTF).
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