The SEC has only once rejected an ETF application from BlackRock

Quick Take

• BlackRock has filed its application for a Bitcoin spot ETF which, if approved, would be the first of its kind to receive the regulatory blessing.
• A historical examination reveals intricate dynamics between the Securities and Exchange Commission (SEC) and BlackRock, particularly in the context of approving or rejecting Exchange-Traded Funds (ETFs), is appropriate.
• BlackRock is the world’s largest asset manager and has only once had an ETF it proposed rejected by the SEC in 2014.
• The proposed ETF was characterized by its nontransparent nature, which would have hidden its holdings from investors, akin to a blind trust. Moreover, Shepherd Smith Edwards and Kanta (SSEK) noted that this ETF did not provide assurance that its trading would be aligned with the net asset value
• According to SSEK, the new ETF would only provide its reports quarterly, a deviation from the SEC’s stipulation of daily reporting and a discrepancy of note.
• The new ETF would also task Coinbase as chief custodian of the fund’s Bitcoin—a decision possibly complicated by the SEC’s recent lawsuit against that exchange.

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