- The SEC has rejected all Bitcoin spot ETF applications so far, citing concerns like market manipulation, but now appears to be softening its stance as major players like BlackRock, Grayscale, and Fidelity apply.
- Top contenders include BlackRock, Grayscale, Bitwise, WisdomTree, Invesco/Galaxy, Valkyrie, Ark Invest, VanEck, Fidelity, and NYDIG/Stone Ridge, with most naming Coinbase as custodian.
- After years of rejections, industry experts predict the SEC may finally approve a Bitcoin spot ETF in early 2024, providing easy crypto access for retail investors.
A Bitcoin exchange-traded fund (ETF) has become something of a holy grail for the crypto community. Advocates argue it would open up crypto exposure to a broader range of investors. However, the SEC has rejected every application for a spot Bitcoin ETF to date over concerns like market manipulation. But the regulator now appears to be softening its stance, prompting a new wave of hopefuls to throw their hats in the ring.
Current Hopefuls
BlackRock
The world’s largest asset manager shocked the TradFi world when it filed for a Bitcoin spot ETF in June 2022. BlackRock quickly moved to address the SEC’s concerns, clarifying details around pricing, reporting, and potential risks. It has named JP Morgan and Jane Street as authorized participants.
Grayscale
Grayscale aims to convert its Bitcoin trust GBTC into a spot ETF, which would enable it to charge lower fees. This could help resolve GBTC’s longstanding premium/discount issues. After litigation with the SEC, Grayscale scored a court win in August 2022 forcing the regulator to review its rejection.
Bitwise
Bitwise aims to list a spot Bitcoin ETF on the Cboe exchange. It has launched an ad campaign enlisting actor Jonathan Goldsmith to push its “Bitwise is Interesting” message. Bitwise is confident its latest filing addresses all the SEC’s past concerns.
WisdomTree
The asset manager applied for a Bitcoin spot ETF in March 2021. After repeated rejections, it filed a new application in mid-2022 naming Coinbase as custodian. WisdomTree already offers a Bitcoin ETF in Switzerland.
Invesco/Galaxy Bitcoin ETF
Invesco and Galaxy Digital filed for a joint Bitcoin spot ETF in September 2021. Invesco is an established ETF provider, while Galaxy offers crypto expertise. The duo reapplied after BlackRock’s June 2022 filing.
Valkyrie
Valkyrie aims to list its spot Bitcoin ETF on the NYSE Arca exchange, with Xapo as custodian. The SEC has repeatedly delayed decisions on Valkyrie’s applications. It acquired an option agreement from CoinShares in November 2022.
ARK Invest
Cathie Wood‘s ARK Invest aims to launch a spot Bitcoin ETF with the ARK 21Shares Bitcoin ETF ticker ARKB. The firm already has Bitcoin exposure via GBTC and crypto stocks. Ark has filed multiple amendments addressing SEC concerns.
VanEck
VanEck is one of the earliest ETF applicants, filing back in 2018. After multiple rejections, it reapplied in June 2022. VanEck has opted to use Gemini as custodian, unlike most applicants choosing Coinbase.
Fidelity Wise Origin Bitcoin Trust
Fidelity filed for a Bitcoin spot ETF in March 2021. Uniquely, it plans to self-custody the Bitcoin. Fidelity added Jane Street as an authorized participant and announced a 0.39% fee.
NYDIG/Stone Ridge
Investment firms NYDIG and Stone Ridge applied in February 2021, seizing on new SEC leadership. NYDIG named Fidelity Digital Assets as custodian in its latest August 2022 filing.
Failed Applications
The SEC has rejected every spot Bitcoin ETF application to date on grounds of insufficient fraud protections and market manipulation concerns. Prominent failed applicants include Kryptoin, First Trust/SkyBridge, One River, and Galaxy Digital.
The Path Ahead
The SEC appears to be softening its stance, as seen from its questions to applicants, focus on cash redemption models, and approval of Bitcoin futures ETFs. The industry is optimistic the regulator may finally approve a spot ETF in early 2024. Major players like Fidelity, BlackRock and Grayscale could prove hard for the SEC to keep rejecting.
Conclusion
After a decade of rejections, the prospect of a Bitcoin spot ETF being approved in the US appears increasingly likely in 2024. This would provide easy crypto access for retail investors and turbocharge Bitcoin adoption. However, the SEC could still surprise by delaying or rejecting pending applications. The coming months will prove pivotal for Bitcoin ETF hopes.
