Today Finance fails to register in the Netherlands and decides to wind down Operations BlackRock files with the SEC to launch a Spot Bitcoin ETF And we talked to an associate professor At Santa Clara University's business School about what that potential fund Would mean for crypto investors if it Can get approved [Music] Welcome to cnbc's crypto world I'm Tanaya michiel digital currency's Reversing course and are on the rise as We head into the three-day weekend Bitcoin inched closer to the 26 thousand Dollar level by noon Eastern ether moved Closer to the 1700 Mark and Solana Rose More than three and a half percent over The past 24 hours in the past week Though bitcoin's price has taken a hit Down three and three quarters percent Meanwhile ether has fallen a whopping 9.8 percent Okay let's talk about the top stories First a couple updates on finance out of Europe The Exchange is pulling out of The Netherlands it announced this Morning that it would be winding down Operations in the region after failing To register with the country's regulator Finance stopped registering new users Immediately and will only allow Withdrawals starting July 17th even in
The announcement the company emphasized Its commitment to Europe's markets and Crypto assets regulation also known as Mika at the same time though French news Outlet Le Monde reports that Paris Prosecutors have been investigating Binance for the unauthorized practice of Acting as a virtual asset service Provider as well as money laundering in A statement to Le Monde binance said On-site visits by Regulators are part of Regulatory obligations and that all Customer information is held securely Next BlackRock is wading into the battle To launch a spot Bitcoin ETF the asset Management giant filed a proposal with The SEC to launch the ishares Bitcoin Trust and if approved BlackRock says it Would allow investors to make an Investment in Bitcoin which without Buying holding or trading Bitcoin Directly now there are other kinds of Bitcoin ETFs like Bitcoin features ETFs Which let you invest in the Cryptocurrency's Futures contracts but The SEC has so far refused to let a Spot-based ETF which lets you trade on The cryptocurrency's price move forward The reason the agency has repeatedly Given for 10 years it could create a Heightened risk of Market manipulation For our main story I spoke with Gustavo Schwenkler an associate professor of Finance at the levy School of Business
At Santa Clara University we talked About what this potential ETF means for Wall Street and crypto investors What do you make of the timing of this Filing by BlackRock 4 spot Bitcoin ETF And why do you think that BlackRock Would push ahead with this with coinbase As its custody partner given the legal And Regulatory mess that coinbase is in With the SEC right now Absolutely yeah Well I think there's uh definitely there Were trade-offs on the table that Blackbra kind of waited out and I think There's probably been a lot of work that Has gone into this application and um They they were probably thinking like do We move this ahead or not and and the Decision was made to move ahead because The benefits probably outweighted the The costs I think they're definitely Strategic moves in in in submitting this Application now at this point given Especially given what's happening I think uh for coinbase this is a really Good opportunity to showcase that one of The biggest asset managers is supporting Them and is basically looking at Bitcoin More like a commodity and in filing this At ETF Uh so I think that really validates kind Of the point that coinbase is making About kind of the kind of assets that They they offer for trading and I think
For BlackRock as well it's it's probably A good time right now in spite of the Mess because Um it it really pushes kind of it pushes Them to be kind of the leader in terms Of like Bringing kind of more mainstream tools To crypto at a time when there's Questions about whether there's a usage For this and and whether it will survive Given the regulatory environment so I Think BlackRock was also thinking that Um that Bitcoin is here to stay crypto Is here to stay we want to be kind of The leaders in in legitimizing kind of This this market and and probably that Was one of the thoughts that went into Into filing this now as well what are Some of the main arguments that BlackRock is making in the smiling and How are they different from arguments That have been made in previous filings For the spot Bitcoin and TF that we have Yet to see be approved in the US Yes so I think one of the main arguments That BlackRock is making now is that There has been a lot more adoption of Crypto uh over the last few years since The last time this was considered uh We've seen lots of inflows from retail Investors into crypto even throughout This period of an instability we've seen Retail investor demand for crypto be Very very strong we've also seen some
Institutional investors move into crypto In spite of the the situation I think The institutional demand has been a Little bit slower but it's still there Crypto investing is is hot still in some Some institutional uh markets So I think one the main argument that They're making is that there's very Strong demand now and if you look at Prices basically it would suggest that The situation currently in the market is Not as scary for some investors as kind Of some people might think Um so I think that's one one big Argument I think a different argument as well is That right now given the push for Regulation coming from the SEC in the US And given kind of what other countries Have done in terms of Regulation if you Look at kind of Europe and if you look At Canada and how they've approved other ETFs body TFS as well I think there's Kind of a push to move the regulator as Well to really consider this market and And how they want to position themselves In terms of in terms of allowing ETFs and Broad accessibility to crypto Markets I think one of the main issues That BlackRock will probably face is That it's still not quite clear How Sound and robust these markets are Especially on the spot side And I think that's going to be the
Strongest argument to make if you look At kind of past applications the Rejections have always been based around Like there's no proper kind of risk Management at the exchange level Potentially uh in terms of kind of like Scams and Bad actors and and Market Manipulation but I think now that the SEC has taken such a serious stand Especially with coinbase around these Kind of issues I think Black Guard is Really trying to position themselves and Really ask for for answers in this Regard this has been a discussion for Such a long time but just as a reminder For viewers can you talk about how a Bitcoin spot Bitcoin ETF would benefit Investors compared to the benefits of Say the the existing Bitcoin Futures ETFs that we do already have in the US So I think the difference the main Difference between these two from the Regulation point of view is that Bitcoin Futures are more regulated right they Trade on on regulated platforms so There's kind of a better framework to Controlling and managing risks in those Markets now for BlackRock the main Argument to make is that Bitcoin Futures Are still kind of a niche market it's It's not a very Broadly adopted Market in in crypto Because it's it's an Institutional Market so the kind of investors that
Trade Bitcoin Futures and and the way Price would react in the Bitcoin Futures Market are potentially different than What you would get in the in the spawn Market so I think one of the main Arguments that that BlackRock is trying To make is that allowing broad masses of Investors to gain exposure to the spot Market allows them really to participate In the proper risk reward trade-off in This market versus kind of what happens In this in the Futures Market where it's A very segmented Market So I think that's the main benefit of Bringing a Bitcoin spot ETF to the Market is that it's a broader it just Captures the broadest reward benefit of The market better okay so what happens Next because we know that these Applications don't just get filed and Then approved weeks later so what can we Expect to be looking for over the next Few months let's say yeah I think this Is definitely a very strategic move both From coinbase and and BlackRock I think What we're going to be experiencing is We're going to get a lot of answers from The Regulators in the US as to like what Is how are we thinking about crypto what Is bitcoin is it a commodity in the end Can we really think of the ztf as a Commodity ETF we're going to get a lot Of answers I think this is part of a Move to push the regulator in the US to
Provide answers as to how crypto will be Regulated going forward and whether We'll have different kind of rules for This versus what already exists so I Think it's definitely going to be a long Process but I think we're going to start Getting a lot of answers as to like how Crypto will be regulated going forward Do you have an inkling about a potential Outcome one way or the other It's it's um as you want to add it's Been 10 years now since the first Application for a spot Bitcoin ETF was Filed and that was from Gemini's uh Cameron and Tyler Winklevoss and you Know you have talked about how Much more evolved the regulatory Landscape is compared to how it actually Feels with all the hostility coming from The US Regulators this year it does feel Further away than ever but are you Optimistic Um I think this is kind of like almost Like a High risk High reward bad for BlackRock I think my Baseline assumption is that This probably is going to get rejected As well uh I think my more optimistic Um assessment is that if this actually Gets approved and it works out really Well that the markets are functioning in Some sort of efficient way Um and we see broader uh Investments Going into crypto from both
Institutional and Retail investors that Would be kind of the best case scenario And that's I think what also blockchain Is betting on that that's how it could Work out but I think it's a it's it's Less likely that that's actually how It's going to work out I think the worst case scenario would be A scenario where basically this gets Approved and the markets break down or There's contagion from crypto to Traditional financial markets which is The main concern of the regulator and This regard Um but it I mean that's kind of the risk Right that that black art is taking on Okay before we go we're wrapping up our Coverage of vision 2023 in Austin Texas While I was at the crypto investing Conference for financial advisors I Spoke with Jeffrey Park a portfolio Manager with bitwise Asset Management he Compared the ongoing crypto Crackdown in The US to the regulatory advancements Overseas take a listen when you see Those activities happening you have to Take a step back and appreciate the General Trend outside the scope of what We live here as Americans witnessing day To day and so while it is a bit of a Short-term hindrance to the broader Dialogue we're able to have as a as it Can serve as a distraction towards the Bigger picture I just think we have to
Remember crypto as a global asset class Has a global audience so it doesn't stop And end with just the perspective of one Regulatory agency here in the United States you can find that full interview Over at cnbc.com crypto world But we'll be back again on Tuesday after The long weekend we'll see you then [Music]
