The U.S. Securities and Exchange Commission has formally granted approval for the United States’ inaugural regulated spot Bitcoin (BTC) exchange-traded funds (ETFs).
This decision comes just a day after the markets experienced turmoil due to a false announcement posted from the SEC’s official Twitter account.
On January 10, the securities regulator greenlit the 19b-4 applications submitted by ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton.
This approval encompasses the rule changes necessary for the listing and trading of spot Bitcoin ETFs on the respective exchanges. The filing was accessible on the SEC website for several minutes before displaying an ‘Error 404’ message.
This landmark approval marks the introduction of the first regulated exchange-traded product in the U.S., providing investors with direct exposure to the price of Bitcoin without the need to purchase and manage it themselves.
Investors will acquire shares in ETFs that hold Bitcoin as the underlying asset. This development comes over a decade after Cameron and Tyler Winklevoss initially sought approval to launch the Winklevoss Bitcoin Trust in 2013.
The SEC had consistently rejected all previous requests for spot Bitcoin ETFs, expressing apprehensions regarding potential market manipulation and fraud.
Nevertheless, the SEC had to reassess its stance following a court decision in August 2023, where Grayscale successfully challenged the SEC’s rejection of its application to transform the Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Now that the spot Bitcoin ETFs have obtained approval, the industry will be keenly observing the commencement of trading for these ETFs.
Alex Thorn, the Head of Digital at Galaxy Research, has projected that inflows into spot Bitcoin ETFs could potentially reach $14 billion within the initial year.
Meanwhile, global fund manager VanEck estimates that around $2.4 billion could flow into spot Bitcoin products during the first quarter of 2024.
The launch of a spot Bitcoin ETF in the United States necessitates approval from the SEC for both the S-1 (or S-3) and 19b-4 forms submitted by the issuers.
On January 8, ten issuers submitted their final amended S-1 and S-3 filings, explicitly disclosing the fees they plan to apply to their respective Bitcoin ETFs.
The world’s largest asset manager, BlackRock, will implement a 0.2% fee structure until the fund accumulates $5 billion in assets under management (AUM). Bitwise closely follows with a fee of 0.24%, while Ark 21Shares and VanEck trail slightly with fees set at 0.25%.
Noteworthy is Ark 21Shares’ decision to waive all fees for the initial six months or until the product achieves $1 billion in AUM. Currently, Grayscale holds the position of the Bitcoin ETF product with the highest fees, imposing a 1.5% fee rate on potential investors.