These institutions are taking a second look at cryptocurrencies, and they are pouring in.

Last week, BlackRock (BLK) filed for a spot Bitcoin exchange-traded fund (ETF). This week, another comically large asset manager, Invesco (IVZ), reapplied for approval to offer a spot Bitcoin ETF. Less ridiculously sized ETF sponsor WisdomTree also reapplied for spot Bitcoin assets yesterday (WisdomTree’s application was originally rejected by the SEC in 2022).

Elsewhere in non-Bitcoin crypto, cryptocurrency exchanges backed by Fidelity, Schwab and Citadel Securities launched in the United States, and Deutsche Bank applied for a digital asset license in Germany.

So yes, institutions are back. But why did $10 trillion asset manager BlackRock and $1.5 trillion asset manager Invesco decide to launch physical Bitcoin ETFs again? Many people have come up with convoluted and tinfoil hat theories (some of which I love).

Theories like BlackRock are scrambling to support Coinbase for a reason, or that big companies are acting on behalf of three letter agencies to keep self-custody Bitcoin away from regular people, or that Wall Street can't let the crypto crowd get too far.

There are many more theories, but here’s a simpler one: Financial institutions like to make money and offering spot Bitcoin ETFs is one way to do that.

Let's focus on BlackRock. If you assume BlackRock has clients (it does), these clients have money they want to give to BlackRock (they do), these clients are willing to pay BlackRock to take care of that money (they do), and BlackRock Ryder listens to its clients (which it mostly does) and then believes there is a certain amount of client demand for "crypto exposure" that will make it worthwhile to provide clients with crypto exposure. Of course, in exchange, there is a fee.

The fact that BlackRock sees a spot Bitcoin ETF as the path of least resistance to providing exposure to clients is another matter. BlackRock will only make money from the ETF if it gets approval. To date, approximately a dozen spot Bitcoin ETF applications have been rejected by the SEC (although there is reason to believe that BlackRack’s latest application will satisfy the market surveillance and disclosure requirements required by the SEC).

To be sure, the path of least resistance for cryptocurrency exposure is this, as the SEC has pledged to “burn the earth and rub salt into the realm of the cryptocurrency industry,” as CoinDesk’s David Z. Morris put it. This also makes it very clear that it doesn’t really have a problem with Bitcoin, its problem lies with other so-called securities masquerading as cryptocurrencies.

Furthermore, BlackRock isn't particularly fond of Bitcoin or cryptocurrencies. In fact, BlackRock CEO Larry Fink once called the Bitcoin protocol an “index for money laundering.” If the spot ETF is approved, I expect there will be other BlackRock-sponsored crypto products in the future.

First of all, I don't think BlackRock, arguably the most powerful company on Wall Street, would have applied for this spot Bitcoin ETF if it didn't think it could get approved. If I were to put on my tinfoil hat, then maybe there's a secret conspiracy to make Bitcoin look completely unappetizing because even BlackRock can't pass a spot ETF. I don't think that's the case.

There's an insidious reason behind the recent influx of spot Bitcoin ETFs, but ultimately you can point to a simple explanation. Financial institutions want to make money, and this is one way to make money.