The U.S. Securities and Exchange Commission (SEC) is expected to make a decision on the approval of spot bitcoin exchange-traded funds (ETFs) by next week, according to sources familiar with the matter. Several prominent asset managers, including Blackrock, Fidelity, and Invesco, have updated their filings with the SEC on Friday, hoping to launch the first-ever U.S. spot bitcoin ETFs.
Bitcoin ETFs are investment products that track the performance of bitcoin, the leading cryptocurrency by market capitalization. They offer investors a convenient and regulated way to gain exposure to bitcoin without the hassle of buying, storing, and securing the digital asset themselves.
Bitcoin ETFs are seen as a catalyst for wider adoption of bitcoin and other cryptocurrencies, as they could attract more institutional and retail investors to the crypto market. They could also provide more liquidity, transparency, and price stability for bitcoin, as well as reduce the risk of fraud and manipulation.
The Race to Launch the First U.S. Spot Bitcoin ETF
The SEC has been reluctant to approve bitcoin ETFs in the past, citing concerns over market volatility, investor protection, and regulatory oversight. However, the regulator has recently signaled a more open stance towards crypto-related products, as it approved several bitcoin futures ETFs in October 2023.
Spot bitcoin ETFs, which directly hold bitcoin in custody, are considered more desirable than futures ETFs, which track the price of bitcoin futures contracts. Spot bitcoin ETFs could offer lower fees, higher returns, and more accurate tracking of bitcoin’s price movements.
The SEC has set a deadline of January 10, 2024, to decide on the proposed spot bitcoin ETF by Ark Invest and 21shares, which was the first to file an application in July 2023. However, sources told Reuters that the SEC may notify issuers as soon as Tuesday or Wednesday that they have been cleared to launch the following week.
Several other firms have also submitted or updated their applications for spot bitcoin ETFs, including:
- Blackrock, the world’s largest asset manager, which plans to seed its ETF with $10 million on Jan. 3 and has named JPMorgan as a lead authorized participant.
- Fidelity, which aims to undercut the competition with a remarkably low 0.39% fee for its Wise Origin Bitcoin Fund.
- Invesco, which offers a 0.59% fee with a six-month waiver for the first $5 billion in assets.
- Vaneck, Valkyrie, Bitwise, Wisdomtree, and others, which have announced similar fee structures and features for their ETFs.
The Potential Impact of Spot Bitcoin ETFs on the Crypto Market
The approval of spot bitcoin ETFs could have a significant impact on the crypto market, as it could boost the demand and price of bitcoin, as well as spur innovation and competition in the crypto industry.
According to a report by Coinbase, the leading U.S. crypto exchange, spot bitcoin ETFs could add billions of dollars to the crypto market, as they could attract more investors who are looking for a simple and secure way to access bitcoin. The report also stated that the SEC approval of spot bitcoin ETFs is possible by the end of 2023, based on the regulator’s recent actions and statements.
However, some analysts and experts have cautioned that spot bitcoin ETFs may not have the same effect as futures ETFs, which were met with high enthusiasm and trading volumes when they debuted in October 2023. They argued that spot bitcoin ETFs may face more regulatory hurdles, technical challenges, and market competition, which could limit their appeal and performance.
Moreover, some crypto enthusiasts have expressed skepticism about the need and value of bitcoin ETFs, as they believe that they could compromise the decentralized and peer-to-peer nature of bitcoin. They argued that investors should buy and hold bitcoin directly, rather than relying on intermediaries and regulators.
Conclusion
The SEC is nearing a crucial decision on the approval of spot bitcoin ETFs, which could reshape the crypto market and the investment landscape. Several prominent asset managers have updated their filings with the SEC, hoping to launch the first-ever U.S. spot bitcoin ETFs by next week. Spot bitcoin ETFs could offer a convenient and regulated way to invest in bitcoin, but they could also face some challenges and criticisms from the crypto community.