The Securities and Exchange Commission (SEC) has granted approval for 11 spot Bitcoin Exchange-Traded Funds (ETFs) on an accelerated basis, according to a document recently uploaded to the SEC website. The approved proposals come from major players in the cryptocurrency space, including Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity, and Franklin.
The SEC’s official document states, “After careful review, the Commission finds that the Proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange.” This marks a significant step forward for the cryptocurrency industry and follows a recent court case that criticized the SEC for its rejection of Grayscale’s earlier attempt to convert GBTC into an ETF, deeming it “arbitrary and capricious.”
The document underscores the interconnectedness of spot Bitcoin and Bitcoin futures markets, suggesting that any fraud or manipulation impacting spot prices could have similar effects on futures prices. Following the initial publication, there was a brief period of unavailability, resulting in a 404 error, but the SEC clarified that the filing was accurate.
In addition to the approval order, SEC Chair Gary Gensler issued a warning in a published speech, stating, “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
Although the approvals include the issuers’ 19b-4 forms, the commencement of trading is contingent on the effectiveness of their S-1 forms. The Cboe BZX exchange had already sought “acceleration of registration” for proposed spot Bitcoin ETFs before official approvals were granted. Subsequently, it issued listing notifications for six ETFs, with trading set to commence on Thursday.
Anticipating substantial inflows once trading begins, industry participants project varying amounts. Valkyrie Investments expects $200 million to $400 million for its ETF, with an estimated total market inflow of $4 to $5 billion across all approved ETFs in the initial weeks. VanEck foresees $1 billion in the first few days and $2.4 billion within a quarter, while Galaxy predicts $14 billion within the first year. Bitwise anticipates the spot Bitcoin ETF market to reach approximately $72 billion within five years.
Despite a recent unauthorized claim on the SEC’s compromised X account suggesting premature approval for Bitcoin ETFs, the official approvals have now been granted. Issuers have secured seed funding for their products, with VanEck leading the way by seeding its potential spot Bitcoin ETF with $72.5 million. Bitwise and BlackRock have also committed initial investments of $500,000 and $10 million, respectively.
Prior to approval, issuers engaged in a fee war, with Bitwise offering zero fees for the first six months or until reaching $1 billion in assets, and 0.2% thereafter. BlackRock maintained a discounted fee of 0.2% for the first 12 months or until reaching $5 billion in assets, and 0.3% thereafter. Other fees among the approved ETFs range up to 1.5% at the highest. The market eagerly awaits the commencement of trading for these newly approved spot Bitcoin ETFs, signaling a significant milestone in the integration of cryptocurrency into traditional financial markets.