Quantifying the BlackRock Effect
The Probability of ETF Approval
As emphasized in previous notes, we view BlackRock's application for a spot ETF as substantial. Regardless of whether an actual spot ETF garners approval in the near term, its “narrative” significance is undeniable.
Yet, our fundamental assumption is that this application indicates new undisclosed insights that Larry Fink and his colleagues are privy to, which the public may not be, and their application will ultimately result in a spot ETF approval.
This hypothesis is reinforced by potential legal developments on the horizon that could further support the approval of a spot-based ETF. Based on our interactions with legal experts in the industry, we are inclined to believe that Grayscale's lawsuit against the SEC will likely tilt in Grayscale's favor.
In simple terms, Grayscale’s argument asserts that the SEC approved a futures-based ETF because of the existence of a sizable, regulated futures market in the US, which can be monitored for market manipulation. In contrast, the SEC argues that the spot market lacks a similarly regulated market of substantial size in the US, leaving it susceptible to manipulation and therefore unsuitable for an ETF. However, as per Grayscale's rationale, since futures market prices are a derivative o...Reports you may have missed
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