BlackRock CEO: ETFs will democratize cryptocurrency investing

Since BlackRock (BlackRock) submitted the spot bitcoin ETF application on June 15, the trading platform WEEX data shows that from June 16 to 23, bitcoin has risen by 19.06% ).

BlackRock's spot bitcoin ETF application has received huge attention not only because one of the world's largest asset managers manages about $8.59 trillion in assets (as of December 31, 2022), but also because BlackRock Germany's past ETF application history is a perfect winning rate──575/576.

However, in the face of the strict defense of the US Securities and Exchange Commission (SEC) - 28 applications and 28 rejections, ETF madman BlackRock has no idea this time. The Wall Street Journal quoted people familiar with the matter as saying on July 1 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. To this end, BlackRock resubmitted through Nasdaq on Monday (July 3), with Coinbase providing market monitoring support.

How does BlackRock win this time? While the entire industry was holding its breath and waiting for progress, on July 5, BlackRock founder and CEO Larry Fink was a guest on Fox Business Channel's "The Claman Countdown" program and talked about the spot Bitcoin ETF that BlackRock is applying for. As well as the hot topic of market concern such as the Fed's interest rate hike forecast.

01 ETFs will democratize cryptocurrency investing

Regarding the iShares Bitcoin Trust that BlackRock is declaring, Fink did not disclose too much substantive news, but said that BlackRock will work closely with the regulators, hoping to hear the opinions of the regulators, and then solve the problem based on the feedback from the regulators. Eliminate regulatory concerns. It is hoped that BlackRock's application will be approved, as BlackRock has worked well with regulators in the past, but it does not know when that day will come.

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

Despite BlackRock's near-perfect record of getting ETF approvals, there's no guarantee it will succeed this time around. You must know that BlackRock has invested in traditional fields such as real estate, energy, and technology in the past. As a new product, the spot bitcoin ETF has not yet received any company's application for SEC approval. According to incomplete statistics, as of now, the SEC has rejected 28 bitcoin spot ETF applications.

For this reason, the host Liz Claman also made complaints 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 blocked by the SEC's "bodyguards", that is, " "Chief Bodyguard" Gary Gensler (SEC Chairman) shut him out.

According to the official process, the SEC’s filing notice on the spot Bitcoin ETF must first be published on the Federal Register, and then it will officially enter the countdown to a review that lasts up to 240 days. The interval between the reply deadlines is 45 days, 45 days, 90 days and 60 days (in order).

Before the final decision on whether to approve, the SEC can make 3 postponement decisions, solicit comments or ask the applicant to provide additional information. But the bad news is that, historically, all applications, including spot ETFs, go through most of the 240-day process before they are finally rejected, which means that if the SEC's first response deadline for BlackRock applications (Date has not yet been determined) to make a decision to postpone, then the probability of being rejected will increase greatly.

Judging from the above historical experience, "Ms. Wood" is a little bit hanging, because the Ark 21Shares Bitcoin ETF submitted by her in cooperation with 21Shares has already been postponed by the SEC once, on June 15th - BlackRock The same day the application is submitted. Of course there are exceptions, Teucrium’s bitcoin futures ETF went through a full process of nearly 240 days, including 3 delayed decisions, but finally passed.

Fink said that ETFs are a major revolution for the mutual fund industry. It is taking over the entire mutual fund industry, and BlackRock is a believer in ETFizing products. BlackRock sees this spot bitcoin ETF as an opportunity to go further in providing services to investors and democratize investment costs, that is, to reduce the threshold and cost of investing in cryptocurrencies. BlackRock has reduced the cost of investing in iShares ETFs by 30% over the past 10 years, he said.

** "So, we hope that regulators will see these (ETF application) documents as a way to democratize cryptocurrencies, and we will see the effect of it in the future." Fink said. **

**Fink believes that Bitcoin was widely used in 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 the devaluation of any country's currency, it is a master of all investment alternatives. **

He also emphasized that the underlying technology of the blockchain is very good, because it helps us simplify the transaction process and improve transaction efficiency through disintermediation. Be aware that throughout the financial process, some intermediaries are terrible.

02 The 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 to raise interest rates, up to 4 times, 25 basis points each time, or add 100 basis points in total. The reason is that inflation is highly sticky and volatile.

According to previous media reports, historically, during the round of inflation from the 1970s to the early 1980s, inflation remained high until two rounds of interest rate hike cycles were contained. So this time it is not ruled out that after the Fed slowed down the pace of raising interest rates, it found that inflation was still stubborn, so it had to start a second round of raising interest rates.

Fink noted that higher interest rates will put more pressure on real estate, the largest asset class for regional banks. Therefore, it is not ruled out that there will be a new round of credit crisis, and other small banks will collapse. There are more than 4,400 banks in the US, more than any country in the world, and maybe in a few years we'll see some of them disappear.

But Fink said that's not to say there will be a systemic crisis. On the contrary, the economy is strong now, and the future prospects are stronger, and the big banks are no problem. 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. , how many jobs will be needed? The job prospects from these bills will be huge, and companies involved in rebuilding infrastructure will be good long-term holdings.”

WEEX Blog believes that Fink is so optimistic about the prospects of the U.S. economy, which is somewhat suspected of "determining the head by the ass" and pushing its products. After all, BlackRock has an asset management scale of about 8.59 trillion US dollars, covering stocks, fixed-income investments, and cash. Management, alternative investment and advisory strategies, etc. In fact, many critics of the above-mentioned stimulus measures in the United States believe that they are too forceful, and the result is the process of raising interest rates and fighting inflation that we are currently experiencing.