Could BlackRock approve a “front-running” Bitcoin ETF? Bloomberg explains

With ETFs in the Bitcoin (BTC) space seemingly weeks away, some crypto investors are wondering if asset managers like BlackRock can “front-runner” approval by using insider knowledge before their much-anticipated currency hits the market.

Ahead of the approval, Bloomberg ETF analyst James Seifert cleared the air on what BlackRock can and cannot do in the bitcoin market and how they handle customer claims on Friday at X Place.

Blackrock BTC position

According to Seifert, ETF applicants can only start buying BTC within days of their funds being launched. This ETF is already “seeded” by funds so that it is ready to sell shares to investors while it is still alive.

“It's not like they're there to protect exposure, especially when they're buying bitcoin on their balance sheet,” Seifert said. “I think there's a lot of hype around what they're doing to ‘get ahead' of this thing.”

The analyst noted that BlackRock could still invest in BTC through other private products, such as the Private Bitcoin Trust – especially if its clients buy BTC before the ETF's confirmation.

In fact, inflows into alternative Bitcoin funds — including Canadian bitcoin ETFs and futures-based ones in the United States — have broken records in recent months amid excitement over the impending approval.

While such EFAs have been repeatedly denied until now, Seifert believes this time will be different thanks to a grayscale court victory against the Securities and Exchange Commission (SEC) in August.

“In October, we heard that the SEC was issuing comments on their S-1 filings,” he said. That's when we went to 90% [odds of approval] Because it was a complete and utter breaking of the pattern.

BlackRock disclosed in an S-1 filing in October that it would seed the fund with $100,000. However, in an updated filing on Friday, that amount increased to $10 million, which is scheduled for Jan. 3.

Approval of income ETF

Given the pending comment periods and approval deadlines of competing applicants, Seifert and other analysts expect simultaneous approval of multiple Bitcoin spot ETFs between January 5th and January 10th.

Bitcoin derivatives markets look bullish ahead of that approval date, with many believing the ETF's approval will be “selling the news.”

But others — including former NYSE president Tom Farley — believe that money will “flow into the industry once an ETF is approved.