Economy 11-01-2024 01:01 16 Views

SEC Approves First Spot Bitcoin ETFs; Grayscale, BlackRock Set to Launch Products

The US Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded funds (ETFs) on Wednesday (January 10), a development crypto investors have been eagerly anticipating.

Approval became increasingly likely in the latter half of 2023 as the SEC began to signal its willingness to consider such products. Many market participants believe the decision will spur wider adoption of the popular cryptocurrency.

In an email note following the decision, Sheila Warren, CEO of the Crypto Council for Innovation, said, ‘A spot Bitcoin ETF is a precursor to a plethora of innovative financial products and services that straddle the line between traditional finance and cryptocurrencies, expanding the horizon for what’s possible within the crypto ecosystem.’

In total, 11 firms will be able to begin offering spot Bitcoin ETFs in the US on Thursday (January 11).

Competition intensifies as firms lower spot Bitcoin ETF fees

Spot Bitcoin ETF hopefuls attracted attention earlier in the week, when they began amending their S-1 applications to offer reduced fees, attempting to out-compete each other in a so-called ‘fee war.’

BlackRock (NYSE:BLK), VanEck, WisdomTree Investments (NYSE:WT), Fidelity Investments and Valkyrie Investments all submitted amended forms. Some firms, such as ARK Invest, Bitwise Asset Management, and Invesco and Galaxy Digital, which are working together on a spot Bitcoin ETF, plan to waive fees for the first six months, or until trading volumes reach a predetermined value, whichever comes first. For ARK Invest and Bitwise, the threshold is set at US$1 billion, while the threshold is US$5 billion for the Invesco and Galaxy partnership.

According to SEC documentation, the 11 approved spot Bitcoin ETFs are as follows:

Grayscale Bitcoin TrustBitwise Bitcoin ETFHashdex Bitcoin ETFiShares Bitcoin TrustValkyrie Bitcoin TrustARK 21Shares Bitcoin ETFInvesco Galaxy Bitcoin ETFVanEck Bitcoin TrustWisdomTree Bitcoin FundFidelity Wise Origin Bitcoin FundFranklin Bitcoin ETF

Bloomberg senior ETF analyst Eric Balchunas expressed surprise at the firms’ willingness to go lower on fees. He mentioned BlackRock’s amended fee of just 0.3 percent in a post on X, formerly known as Twitter, saying it is cheaper than he predicted and will make it difficult for other players to compete.

Meanwhile, traders have been driving up the price of Bitcoin. According to analysts at Fineqia International, Bitcoin passed US$47,000 on Tuesday (January 9), an increase of 6.9 percent compared to Monday (January 8). Meanwhile, the Defiant reported reported that the Ethereum/Bitcoin ratio fell to its lowest point since May 2021. The ratio was reportedly as low as 0.048 percent as an influx of traders rushed to take advantage of Bitcoin’s rally.

False spot Bitcoin ETF approval sparks market frenzy

Speculation from market participants intensified around 4:00 p.m. EST on Tuesday, when the SEC’s official X account released a since-deleted post stating that all applications for spot Bitcoin ETFs had been approved. Minutes later, the price of Bitcoin was at its highest point of the day, rising to just below US$48,000.

Shortly after the post, SEC Chairman Gary Gensler said the following:

The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.

— (@)

After Gensler’s update, the Bitcoin price fell and stabilized between US$45,500 and US$46,000.

On Monday, Gensler posted a short advisory on X, warning potential investors of the risks associated with investing in crypto and reminding market participants that not all crypto investment projects comply with SEC guidelines.

As of 5:15 p.m. EST on Wednesday, Bitcoin was trading at US$46,058.28, representing an increase of 0.9 percent over the last 24 hours. The Ethereum/Bitcoin ratio was around 0.055 at that time.

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

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