SEC Ruling investors are eagerly anticipating a crucial decision from the U.S. Securities and Exchange Commission (SEC) that could mark the approval of a spot bitcoin exchange-traded fund (ETF). This development follows more than a decade of unsuccessful attempts to gain approval for such funds. Notably, 13 companies have submitted applications for a spot bitcoin ETF, reflecting the growing interest in these investment vehicles.
Companies Awaiting Approval:
- Grayscale Bitcoin Trust
- Ark/21Shares Bitcoin Trust
- Bitwise Bitcoin ETF Trust
- BlackRock Bitcoin ETF Trust
- VanEck Bitcoin Trust
- WisdomTree Bitcoin Trust
- Valkyrie Bitcoin Fund
- Invesco Galaxy Bitcoin ETF
- Fidelity Wise Origin Bitcoin Trust
- Global X Bitcoin Trust
- Hashdex Bitcoin ETF
- Franklin Templeton Digital Holdings Trust
- Pando Asset Spot Bitcoin Trust
Components of the Applications:
- 19b-4 Filing: Exchanges, including NYSE, Nasdaq, and Cboe, have submitted 19b-4 filings, informing the SEC of proposed rule changes necessary for trading a spot bitcoin ETF. The deadline for Ark/21Shares Bitcoin Trust’s 19b-4 filing is Jan. 10.
- Approval of S-1: Each company has filed an S-1, a document registering the new security with the SEC. The differences in product structure among applicants are outlined in these filings. The approval of S-1 applications is anticipated after the 19b-4 filings are approved.
Fee Structure and Competition:
- Fee Variations: Fee structures vary among applicants. Fidelity’s Wise Origin Bitcoin Fund charges 39 basis points, Invesco Galaxy Bitcoin ETF has an expense ratio of 59 basis points (waived for the initial six months and first $5 billion in assets), while Ark/21Shares and Valkyrie charge 80 basis points. Grayscale Bitcoin Trust currently charges 2%, with a commitment to lower the fee upon ETF conversion.
Regulatory Landscape and SEC Chair Gary Gensler:
- Gensler’s Engagement: SEC Chair Gary Gensler has been actively engaged in legal battles with the crypto industry. Despite his efforts, Grayscale Bitcoin Trust won a case against the SEC last summer, emphasizing the SEC’s inconsistency in approving futures-based bitcoin products but not spot bitcoin products.
- Regulation by Enforcement: With no clear federal rules, the SEC has resorted to regulation by enforcement, treating many cryptocurrencies as securities. Ongoing cases against major crypto players like Coinbase and Binance underscore the SEC’s regulatory stance.
Outlook and Market Impact:
The outcome of the SEC ruling holds significant implications for the cryptocurrency market. If approved, spot bitcoin ETFs could provide a regulated investment avenue for investors, potentially impacting market dynamics. However, the SEC’s approach and potential conditions attached to approvals remain uncertain, adding an element of anticipation to the crypto community.
Investors and industry participants are closely watching the SEC’s decision, as it could signal a pivotal moment in the integration of cryptocurrencies into traditional financial markets.