The crypto world witnessed a historic moment when spot Bitcoin exchange-traded funds (ETFs) were officially approved for trading on Thursday, 11 January. This approval, which came after a long wait and was granted by the U.S. Securities and Exchange Commission (SEC) on Wednesday 10 January, marks a new era in the world of cryptocurrencies.
The Spot Bitcoin ETFs Approved By The SEC
The SEC approved the following spot bitcoin ETFs:
- ARK 21Shares Bitcoin ETF (ARKB)
- Bitwise Bitcoin ETF (BITB)
- Fidelity Wise Origin Bitcoin Trust (FBTC)
- Franklin Bitcoin ETF (EZBC)
- Grayscale Bitcoin Trust (GBTC)
- Hashdex Bitcoin ETF (DEFI)
- Invesco Galaxy Bitcoin ETF (BTCO)
- iShares Bitcoin Trust (IBIT)
- Valkyrie Bitcoin Fund (BRRR)
- VanEck Bitcoin Trust (HODL)
- WisdomTree Bitcoin Fund (BTCW)
In an effort to attract investors, many issuers reduced and waived the fees for their spot bitcoin ETFs prior to receiving SEC approval.
The History Of Spot Bitcoin ETFs
It goes without saying that it has been a notably long road for the approval of spot bitcoin ETFs in the USA. The journey towards creating a new financial product began in the year 2013, when an organisation affiliated with the famous Winklevoss twins submitted the very first application for the said product to the Securities and Exchange Commission (SEC). This marked a significant step towards the realisation of the product, which could potentially revolutionise the financial industry.
Although this particular application was not approved, the SEC began approving bitcoin ETFs based on futures products in 2021. Previously, many spot-based bitcoin ETF applications were rejected due to concerns about the unregulated nature of bitcoin and the risks it poses to investors. To seek more clarity on this matter, crypto asset manager Grayscale eventually sued the SEC.
In June of last year, Blackrock (BLK) applied for a spot bitcoin product, which gained support from other investment giants like Fidelity and Franklin Templeton. The involvement of these traditional finance firms was seen as a positive sign for regulatory approval, given their significant role in the U.S. financial system.
During the process of finalising the regulations and issuances, some last-minute issues arose. One such issue occurred when an unauthorised post was made on the social media platform X, announcing the SEC’s approval on Tuesday. This caused the price of bitcoin to surge past $48,000. However, the SEC later clarified that the post from its X account had been compromised.
The SEC Approval And What It Signifies For The Future Of Bitcoin And Crypto
The SEC’s stamp of approval is a significant moment for the cryptocurrency world. It provides investors with greater regulatory safeguards and opens up the space for investments from established financial firms. However, SEC Chair Gensler reminds us to consider the risks before investing.
Gensler stated:
“While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
Prior to last week Thursday, individual investors had limited options for investing in cryptocurrencies. They could either purchase coins directly or invest in ETFs that trade in cryptocurrency futures.
However, the introduction of a spot bitcoin ETF now provides investors, particularly retail investors, with an opportunity to invest in bitcoin without the need to store their investment in a bitcoin wallet. Instead, they can simply hold the ETFs in their brokerage account.
The potential growth of the crypto ETF market is quite significant, and investors are optimistic about it. This has led to a substantial increase in the price of bitcoin in recent months. Bloomberg Intelligence estimates that the market could eventually reach a value of $100 billion. In addition, Galaxy predicts that inflows in spot bitcoin ETF products could increase from $14 billion in the first year to $39 billion within three years.
How Much Money Do These Crypto ETFs Handle?
The cryptocurrency market is making history with a groundbreaking moment as eleven crypto ETFs, worth a whopping $27.9 billion, finally enter the U.S. stock market. This momentous event comes after years of regulatory hurdles and investor protection concerns, making it a truly exciting time for the crypto industry.
| ETF NAME | TICKER | ASSETS UNDER MANAGEMENT | BTC UNDER MANAGEMENT | ANNUAL FEE | FEE WAIVER DETAILS |
| Grayscale Bitcoin Trust | (GBTC -4.35%) | $28.6 billion | 619,187 | 1.5% | N/A |
| VanEck Bitcoin Trust | (NYSEMKT: HODL) | $75.2 million | 1,629 | 0.25% | N/A |
| Fidelity Wise Origin Bitcoin Trust | (NYSEMKT: FBTC) | $20 million | 433 | 0.25% | Waived until August 1, 2024 |
| iShares Bitcoin Trust | (NYSEMKT: IBIT) | $10.4 million | 228 | 0.25% | 0.12% for first 12 months or until $5 billion AUM |
| ARK 21Shares Bitcoin ETF | (ARKB -4.46%) | $10.3 million | 223 | 0.21% | Waived for first 6 months or until $1 billion AUM |
| Invesco Galaxy Bitcoin ETF | (BTCO) | $5.0 million | 108 | 0.39% | Waived in first 6 months for the first $5 billion AUM |
| Hashdex Bitcoin ETF | (DEFI -4.17%) | $5.0 million | 108 | 0.9% | N/A |
| Bitwise Bitcoin ETF | (NYSEMKT: BITB) | $2.5 million | 54 | 0.2% | Waived in first 6 months for the first $1 billion AUM |
| Franklin Bitcoin ETF | NYSEMKT: EZBC) | $2.7 million | 58 | 0.29% | N/A |
| Wisdom Tree Bitcoin Fund | (BTCW -4.10%) | $2.4 million | 52 | 0.3% | Waived in first 6 months for the first $1 billion AUM |
| Valkyrie Bitcoin Fund | (BRRR -4.69%) | $523,000 | 11 | 0.25% | Waived in first 3 months |
It is highly likely that the majority of these figures will undergo rapid changes.After the SEC’s long-awaited approval, some of these funds are entirely new investment vehicles, while others have been around for a while.
The Grayscale Bitcoin Trust has been managing its Bitcoin holdings using a mutual fund structure for over a decade since its foundation in 2013. On the other hand, the Hashdex Bitcoin ETF, previously known as the Hashdex Bitcoin Futures ETF, started basing its price on financial derivatives of the actual Bitcoin asset in 2021.
Investors can anticipate a swift and substantial increase in funds flowing into these innovative and revamped ETF assets. Some funds will experience a rapid surge in assets under management (AUM), while others may see a slower but steady increase as buyers make informed decisions based on their preferences.
The above overview is a valuable tool to help guide investors in evaluating the expense ratios, introductory fee-waiver policies, and the potential scale of each Bitcoin ETF.
