Bitcoin ETF will spur significant institutional demand, according to EY

By: Henry Felix

Bitcoin ETF will spur significant institutional demand, according to EY

October 24, 2023 3:24 AM

According to Paul Brody, global leader of blockchain at Ernst & Young, institutional demand for Bitcoin is building rapidly as investors actively track spot Bitcoin ETF developments.

 

According to a blockchain executive at professional services company Ernst & Young (EY), Bitcoin (BTC) is in high demand from institutional investors but needs spot BTC exchange-traded fund (ETF) clearance to spark a buying rally.


Paul Brody, EY's global leader of blockchain, thinks that there is pent-up demand from institutions for Bitcoin because U.S. regulators have taken so long to approve a spot Bitcoin ETF.


On CNBC's Crypto Decrypted on October 23, Brody talked about the future of cryptocurrency adoption and said that if a Bitcoin exchange-traded fund (ETF) is established, trillions of dollars worth of institutional money will flood into Bitcoin.


"However, any of these other types of institutional funds cannot interact with this stuff unless it's an exchange-traded fund (ETF) or another form of regulatory-approved activity," EY's blockchain expert explained, adding:


"Those who purchase Bitcoin do so as an investment, the author argues. They are not planning to use it as a means of exchange. Most Ethereum buyers are investing in cryptocurrency as a computing platform for conducting commercial transactions and utilizing DeFi [decentralized finance] services."


Given that the U.S. Securities and Exchange Commission (SEC) has not yet approved a single-spot Bitcoin ETF, Brody's comments come at a time when investors around the world are closely monitoring the SEC's crypto regulation process. Grayscale Investments, ARK Investment, BlackRock, and Fidelity are just a few of the firms that have submitted applications to the SEC for Bitcoin ETFs and are now awaiting a regulatory response.


In order to get its Grayscale Bitcoin Trust listed on the New York Stock Exchange Arca, Grayscale, which in August 2023 won a case against the SEC for a review of spot Bitcoin ETFs, has just submitted an S-3 form registration statement with the SEC.


A recent update to the spot Bitcoin ETF by ARK Invest and 21Shares is a "good sign" of development and upcoming approvals, according to Eric Balchunas, senior ETF analyst at Bloomberg. The ETF specialist thinks the mid-October 2023 ETF changes may have been submitted in response to SEC requests for clarification on certain issues with certain ETFs.