January 10, 2024

Spot Bitcoin ETFs Secure Regulatory Green Light from SEC in Historic Move

As expected, the SEC grants approval for bitcoin ETFs and will begin trading tomorrow.

In a groundbreaking move, the U.S. Securities and Exchange Commission (SEC) has granted approval for the listing of spot bitcoin Exchange-Traded Funds (ETFs) and will begin trading tomorrow. This decision represents a pivotal moment in the mainstream financial adoption of cryptocurrencies, following years of anticipation and previous rejections based on concerns over market manipulation and investor protection.

The SEC officially announced the approval on their website on Wednesday.

A diverse array of issuers, including Grayscale, Fidelity, Valkyrie, iShares BlackRock, Ark, VanEck, Franklin Templeton, Invesco Galaxy, WisdomTree, Global X, Hashdex & 7RCC, and Pando, have received approval. These issuers have actively addressed the SEC's concerns and structured their products to meet regulatory standards.

The approval of spot bitcoin ETFs is expected to enhance retail investors' access to the largest cryptocurrency at a more affordable cost compared to existing alternatives. This move is anticipated to significantly boost bitcoin market liquidity and provide institutional traders with more robust tools.

Each issuer has established its management fees, with Fidelity setting an annual fee of 0.39% for its Wise Origin Bitcoin Trust and Valkyrie disclosing a management fee of 0.80%. A fee competition has emerged, with BlackRock announcing a 0.25% fee (0.12% for the first $5 billion), countered by Ark's 0.21% filing (0% for the first $1 billion).

  • Grayscale $GBTC 1.50%
  • Hashdex $DEFI 0.90%
  • Valkyrie $BRRR 0.80%
  • Invesco/Galaxy $BTCO 0.59%
  • WisdomTree $BTCW 0.50%
  • Fidelity $FBTC 0.39%
  • BlackRock $IBIT 0.30%
  • Franklin $EZBC 0.29%
  • Ark $ARKB 0.21%
  • VanEck $HODL 0.25%
  • Bitwise $BITB 0.20%

Some institutions have announced that they are seeding their spot bitcoin ETFs with:

  • Bitwise: $200 million
  • VanEck: $72.5 million
  • BlackRock: $10 million
  • Invesco/Galaxy: $5.1 million
  • Hashdex: $2.8 million
  • WisdomTree: $2.5 million

These competitive fees align with traditional ETFs, making the products appealing to a broad range of investors.

The approval of spot bitcoin ETFs is a significant stride for the crypto industry, offering a more accessible and regulated pathway for investors to enter the bitcoin market. Moreover, it signals a level of acceptance and legitimacy for cryptocurrencies by regulatory authorities.

However, it's crucial to acknowledge the accompanying risks in the broader crypto market. The SEC has previously voiced concerns about market manipulation and investor protection. Prospective investors should carefully consider these risks before making investment decisions.

The respective issuers will announce the exact launch dates for these ETFs in due course, but most will begin trading starting tomorrow. Investors are advised to stay informed by monitoring announcements from these issuers for the latest information.

The SEC's decision represents a noteworthy advance in recognizing bitcoin and other cryptocurrencies as legitimate and investable assets. This approval opens doors to new opportunities for investors and may pave the way for further developments and innovations in the crypto space.

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