In addition to providing more snooping access for regulators, BlackRock's ETF might come with another perk for the SEC — the ability to save face by approving another, more regulator-friendly spot bitcoin ETF and thus beating Grayscale to the punch. As Bloomberg litigation analyst Elliot Z. Stein put it: "The SEC and Chair Gary Gensler may be bracing for a loss and looking to pre-emptively soften it or make it meaningless by approving a spot bitcoin ETF application before or around the same time as a court decision."
Ms. Smith said she's also heard this line of thinking on Capitol Hill.
"The SEC might want to approve (BlackRock's) ETF application and then go back to the court and basically prevent the court from having to make a decision at all," Ms. Smith explained. "The SEC realizes they're probably going to lose, they don't want to lose, so if they do this that would sort of moot the other case and the judge wouldn't have to make a decision."
While many in the market think that the flood of spot bitcoin ETF applications is connected to the Grayscale suit and other external circumstances, others have dismissed this as speculation.
Speaking on the Bankless podcast on June 22, Austin Campbell, a New York-based professor of business at Columbia University and managing partner of Zero Knowledge Consulting, said: "Anytime something like this happens at a traditional finance firm, and you see things come together over a two-week period, that's probably a culmination of six to 18 months of work behind the scenes. Everything moves slowly at these places."
"The time scales you operate on are just glacial compared to what you're going to see in the regular world. If BlackRock filed an ETF application, they've been thinking about it for a while," he said.
As for why they picked the current moment to file, Mr. Campbell put it down to two things: "One, it's telling the SEC and the U.S. government, if we can't get our act together here, there's a lot of things that are already happening offshore … if you block us here, we're probably just going to take our business offshore."
Another thing, he said, is that BlackRock CEO Larry Fink "is pretty influential in the Democratic Party. I think this may be a little bit of a signal from the TradFi world, that we'd like you to find a constructive solution to this problem and not just keep blocking it."
Mr. Campbell explained that U.S. financial regulators have been slow to provide regulatory guidelines for crypto — a fact that has chagrined many industry participants, who decry the SEC's so-called regulation by enforcement — while regulators in places like Japan and the European Union have created laws and guidance.
Mr. Hougan of competitor Bitwise added that "spot bitcoin ETFs have been operating well globally for multiple years."
"I think U.S. traditional financial firms are genuinely at the point of being very worried about being left behind, and that's part of the reason you're seeing these things come forward," Mr. Campbell said.
Kathie O'Donnell contributed to this story.