U.S. regulators have given their approval for bitcoin exchange-traded funds (ETFs), marking a significant milestone in the widespread accessibility of the 15-year-old cryptocurrency. The Securities and Exchange Commission (SEC) recently announced the effectiveness of key filings from various markets seeking to list these groundbreaking products, and trading is set to commence on Thursday.
Following this decision, Bitcoin’s price surged beyond $47,500, with other cryptocurrencies experiencing notable rallies. Approximately a dozen companies, including major names like BlackRock, Fidelity, and Grayscale, have been striving to establish bitcoin (BTC) ETFs. In anticipation of potential approval, these companies have recently disclosed, and in some cases adjusted, the fees they intend to impose on investors, indicating an impending competitive landscape for securing investor funds.
These approved ETFs fall into the category of spot ETFs, holding actual bitcoin, distinguishing them from the already authorized bitcoin futures ETFs that involve derivative contracts linked to BTC. The SEC’s green light comes after years of delays and rejections of multiple attempts to introduce spot bitcoin ETFs, and it follows a significant legal setback for the SEC in August. At that time, the D.C. Circuit Court of Appeals ruled against the SEC’s rejection of Grayscale’s bid to transform its approximately $26 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF, deeming the decision “arbitrary and capricious.”
SEC Chair Gary Gensler, in a statement, referred to the court’s decision as part of the motivation behind approving the filings. He stated, “The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order). The court therefore vacated the Grayscale Order and remanded the matter to the Commission.”
Advocates for spot bitcoin ETFs have long contended that a regulated trading product focused on the world’s oldest cryptocurrency would facilitate both institutional and retail clients’ exposure to bitcoin’s price movements without the need for them to set up wallets or directly invest in the digital asset. ETF shares will be accessible to any U.S. investor with a brokerage account.
While SEC Commissioner Hester Peirce celebrated the approval, highlighting the right of American investors to engage with spot bitcoin ETPs, Commissioner Caroline Crenshaw dissented from the approval order. Crenshaw expressed concerns about the safety of the bitcoin spot market from fraud or manipulation, emphasizing distinctions between spot and futures products.
The approval, anticipated toward the end of 2023, became increasingly likely with a series of meetings between the SEC and proposed ETF issuers, along with multiple amendments to the applicants’ ETF S-1 filings. The final 19b-4 submissions from major exchanges such as NYSE Arca, Cboe BZX, and Nasdaq, aligned with the amended S-1 filings from ETF issuers, set the stage for the launch.
Brokerages like Fidelity and E-Trade began including tickers associated with these ETFs on their platforms, further fueling optimism. With rising confidence in spot ETFs, Bitcoin’s price surged from around $27,000 in October 2023 to over $45,000 at the beginning of 2024.
Grayscale’s Vice President for Communications, Jenn Rosenthal, confirmed the regulatory approvals for uplisting GBTC to NYSE Arca, expressing readiness to share additional information soon. Hashdex Chief Investment Officer Samir Kerbage hailed it as a monumental day in the history of digital assets.
In a somewhat unusual turn of events, the SEC initially published, then seemingly deleted, an order approving the U.S.’s first spot bitcoin ETFs on Wednesday.
