The long road toward regulatory approval of a Spot Bitcoin ETF in the U.S. may finally be nearing an end. With U.S. investors eagerly awaiting access to a regulated Bitcoin investment product, analysts say January 2024 may prove to be the breakthrough month for approval following years of rejections and delays.
A Bitcoin ETF would allow mainstream investors to gain exposure to the price of Bitcoin through the traditional stock market infrastructure. Instead of having to directly purchase and custody cryptocurrency, investors could simply trade an SEC-registered security designed to track Bitcoin’s market value.
Despite the proliferation of Bitcoin ETFs globally, the SEC has consistently rebuffed attempts to introduce a spot BTC ETF, citing concerns about market manipulation within the volatile cryptocurrency space. However, SEC Chair Gary Gensler announced in December 2023 that the regulator was “taking a new look” at spot BTC ETF applications. This signals a potential shift in stance.
The Contenders in the Bitcoin ETF Race
Numerous heavyweight financial players are in the running for the coveted spot Bitcoin ETF approval.
- BlackRock: The world’s largest asset manager, managing over $9 trillion, filed a spot BTC ETF application in June 2023. The proposal designates Coinbase as the crypto custodian and spot market data provider, with BNY Mellon as the cash custodian.
- Grayscale: A major crypto investment fund manager, Grayscale, managing over 600,000 BTC, filed for the conversion of its GBTC Bitcoin trust into a spot Bitcoin ETF in October 2021.
- Bitwise: After an initial rejection in 2019, Bitwise refiled its spot Bitcoin ETF application in 2021. This time, opting for direct trading based on Bitcoin rather than futures.
- WisdomTree: Already running a Bitcoin ETF on Switzerland’s SIX stock exchange, WisdomTree joined the U.S. Bitcoin ETF hopefuls in March 2021.
- Invesco Galaxy: Galaxy Digital and Invesco filed a joint Bitcoin ETF in September 2021. They propose a physically backed ETF by Bitcoin rather than derivatives.
- Valkyrie: A newer entrant, Valkyrie, filed its first application in January 2021, referencing the Chicago Mercantile Exchange’s Bitcoin price for its ETF.
- ArkInvest: Led by Cathie Wood, Ark Invest filed for the Ark21Shares ETF in June 2021, in collaboration with Swiss-based ETF provider 21Shares AG.
- VanEck: An early applicant, VanEck made its first attempt at a Bitcoin ETF in 2018. After a withdrawal in 2019, it filed a new application in December 2020.
- Fidelity: Applying in March 2021, Fidelity sought approval for the Wise Origin Bitcoin Trust, with Fidelity Digital Assets as the custodian.
- Hashdex: The largest crypto asset management firm in Latin America, Hashdex, entered the race in August 2023, proposing to convert its existing Bitcoin futures ETF to a spot ETF.
- Franklin Templeton: Joining the race in September 2023, Franklin Templeton, with around $1.4 trillion in assets under management, is vying for approval.
Optimism for Spot Bitcoin ETFs at an All-Time High
As all applicants submit their final 19b-4 amendments, optimism runs high in the industry. CNBC has even ventured a prediction, expecting Spot Bitcoin ETFs to gain approval this week, with trading possibly commencing shortly after. In addition, this optimism has fueled an advertisement battle and pricing competition among major asset management firms, including BlackRock, Fidelity, and Grayscale.
With the SEC on the brink of a decision, the crypto and traditional finance communities are eagerly awaiting the outcome that could reshape the landscape of Bitcoin investment in the United States.