To date, the regulator has yet to approve a spot ETF linked to a cryptocurrency. This is in keeping with its cautious approach to the crypto market. In fact, last week the SEC sued two crypto exchanges, Coinbase and Binance, on the basis that they have failed to register as a securities trading venue.

The SEC maintains that digital assets should be treated the same way as conventional securities and subject to the same rules.

The likes of Binance and Coinbase have pressed for a new regulatory framework that caters specifically for digital or crypto assets.

The licence applications have led to speculation that the SEC might approve its first crypto ETF which in turn has seen a bump in the price of bitcoin which rose from less than $25,000 to more than $26,000 in the immediate aftermath of the BlackRock application.

Bitcoin has since surged beyond $30,000 for the first time since April and only the second time in 2023.

It is not the first time that asset managers have made such an application to the SEC. WisdomTree has seen its application rejected twice (in December 2021 and October 2022) due to concerns about fraud and market manipulation.

BlackRock has attempted to assuage these fears by entering into a “surveillance sharing agreement” with the Chicago Mercantile Exchange futures markets.

And WisdomTree has adopted a similar strategy, stating that it is willing to also enter a surveillance agreement with the operator of a US-based spot trading platform for Bitcoin.