BlackRock CEO: Bitcoin is an international asset ETF will promote the democratization of cryptocurrency investment

Since BlackRock submitted its spot Bitcoin ETF application on June 15, data from the trading platform WEEX shows that Bitcoin has risen by 19.06% from June 16 to 23 (during this period there were also other positive factors such as the launch of EDX Markets).

BlackRock's application for a spot Bitcoin ETF has attracted huge attention, not only because one of the world's largest asset management companies manages approximately US$8.59 trillion in assets (as of December 31, 2022), but also because BlackRock has a perfect winning rate in the history of ETF applications - 575/576.

However, facing the strict defense of the U.S. Securities and Exchange Commission (SEC) - 28 applications rejected 28 times, ETF madman BlackRock is also at a loss this time. The Wall Street Journal quoted an insider on July 1 as saying that the SEC informed Nasdaq and Cboe Global Markets that the spot Bitcoin ETF applications submitted by BlackRock and Fidelity Investments were not clear enough and lacked necessary information. For this reason, BlackRock resubmitted the documents through Nasdaq on Monday (July 3), with Coinbase providing market monitoring support.

What are BlackRock’s chances of success this time? While the entire industry was holding its breath and waiting for progress, on July 5, Larry Fink, founder and CEO of BlackRock, was a guest on Fox Business Channel’s “The Claman Countdown” program, where he talked about the spot Bitcoin ETF that BlackRock is applying for, as well as the Federal Reserve’s rate hike forecast and other hot topics of market concern.

01 ETF will promote the democratization of cryptocurrency investment

Fink did not reveal much substantive information about the iShares Bitcoin Trust that BlackRock is applying for. He only said that BlackRock will work closely with regulators and hopes to hear the regulators' opinions, and then solve problems based on the regulators' feedback and eliminate regulatory concerns. He hopes that BlackRock's application will be approved, just like BlackRock's good cooperation with regulators in the past, but he does not know when that day will come.

It is understood that BlackRock manages US$2.4 trillion in ETF products. Historically, it has submitted 576 ETF applications, of which 575 were successful and only 1 was rejected.

Although BlackRock has a near-perfect record in obtaining ETF approval, there is no guarantee that it will succeed this time. BlackRock has previously invested in traditional fields such as real estate, energy, and technology, and as a new product, no company has yet obtained SEC approval for the spot Bitcoin ETF. According to incomplete statistics, the SEC has rejected 28 applications for Bitcoin spot ETFs so far.

For this reason, host Liz Claman also complained about the SEC on the show, saying that from Ark to Instress Eco, Vanek, and Grayscale, these fund companies are eager to do the same thing, but they are all turned away by the SEC's "bodyguard", that is, "chief bodyguard" Gary Gensler (SEC Chairman).

According to official procedures, the SEC's filing notice for the spot Bitcoin ETF must first be published in the Federal Register, and then it will officially enter a review countdown lasting up to 240 days, with response deadlines at intervals of 45 days, 45 days, 90 days and 60 days (in order).

Before making a final decision on whether to approve, the SEC can postpone the decision three times, solicit opinions or require the applicant to provide additional information. But the bad news is that historically, all applications, including spot ETFs, have gone through most of the 240-day process before being rejected. That is to say, if the SEC postpones the decision before the first response deadline of BlackRock's application (the date has not yet been determined), the probability of being rejected in the end will increase significantly.

Judging from the above historical experience, Wood Sister is in a bit of trouble, because the Ark 21Shares Bitcoin ETF she submitted in cooperation with 21Shares has been postponed by the SEC once, on June 15, the same day BlackRock submitted its application. Of course, there are exceptions. Teucrium's Bitcoin futures ETF went through a complete process of nearly 240 days, including 3 delayed decisions, but it was finally approved.

Fink said that ETFs are a major revolution for the mutual fund industry, and they are taking over the entire mutual fund industry, and BlackRock is a believer in ETF-ing products. BlackRock sees this spot Bitcoin ETF as an opportunity to go a step further in providing services to investors and democratize investment costs, that is, to lower the threshold and cost of cryptocurrency investment. He said that BlackRock has reduced the investment cost of iShares' ETFs by 30% in the past 10 years.

“So we hope that regulators will view these (ETF application) filings as a way to democratize crypto, and we’ll see how that plays out,” Fink said.

Fink believes that Bitcoin was used extensively for illegal activities in the early days, but as the investment threshold is lowered, he believes in its value as "digital gold." He emphasized that Bitcoin is a global asset, not just a tool to fight inflation and hedge against the depreciation of any country's currency. It is the epitome of all investment alternatives.

He also emphasized that the underlying technology of blockchain is great because it helps us simplify the transaction process and improve transaction efficiency by disintermediating. You know, in the entire financial process, some intermediaries are very bad.

02The Fed is expected to raise interest rates up to 4 times or 100 basis points

After recharging his faith, Fink immediately poured cold water on it. He believes that the Fed will have to continue raising interest rates, up to four times, 25 basis points each time, or a cumulative increase of 100 basis points. The reason is that inflation is highly sticky and repetitive.

According to previous media reports, historically, during the period of inflation from the 1970s to the early 1980s, inflation remained high and was not curbed until two rounds of interest rate hikes. Therefore, it is not ruled out that this time the Fed will find that inflation is still stubborn after slowing down the pace of interest rate hikes, and thus will have to start a second round of interest rate hikes.

Fink pointed out that higher interest rates will bring more pressure to real estate, which is the largest asset class of regional banks. Therefore, it is not ruled out that there will be a new round of credit crisis and other small banks will fall. There are more than 4,400 banks in the United States, more than any other country in the world, and maybe in a few years we will see some of them disappear.

But Fink said that this does not mean that there will be a systemic crisis. On the contrary, the current economy is strong and the future prospects are stronger. There is no problem for big banks. He pointed out that the United States has injected $1 trillion in stimulus measures and enacted three large stimulus plans last year-the infrastructure bill, the chip bill and the investment bill. "Everything has just begun. Think about how many jobs are needed to rebuild airports, highways and ports? The employment prospects brought by these bills will be huge, and companies involved in infrastructure reconstruction will be good long-term holding targets."

WEEX Blog believes that Fink is so optimistic about the US economic outlook that it is somewhat suspected of "following the lead" and promoting its products. After all, BlackRock has an asset management scale of about 8.59 trillion US dollars, covering stocks, fixed income investments, cash management, alternative investments and consulting strategies. In fact, many critics of the above-mentioned US stimulus measures believe that they are too strong, and the consequence is the interest rate hike and anti-inflation process we are currently experiencing.