Several businesses, such as Grayscale, Fidelity, and BlackRock, attempted to develop bitcoin (BTC) exchange-traded funds (ETFs). They have disclosed — and in some cases, drastically reduced — the fees they intend to charge investors in recent days, indicating a competitive struggle for their capital. As opposed to the previously authorized bitcoin futures ETFs, which hold derivatives contracts linked to BTC, these spot ETFs hold bitcoin itself.
The SEC’s approval comes after years of holdups and flat rejections of multiple attempts to introduce spot bitcoin exchange-traded funds (ETFs). It also occurred not too long after the agency suffered a crushing legal setback. The SEC was deemed to have been “arbitrary and capricious” in August by the D.C. Circuit Court of Appeals, in light of Grayscale’s attempt to turn its approximately $26 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF.
By the end of 2023, the SEC approval that had been granted earlier this year appeared to be a given. A rush of meetings involving the agency and the potential issuers of ETFs left the appearance that many “t’s” had been crossed and “i’s” had been dotted in the applicants’ ETF S-1 filings before launch. In a statement, SEC Chair Gary Gensler stated that the agency’s decision to authorize the roughly dozen papers on Wednesday was partly influenced by a 2023 court setback. In October of 2024, the price of bitcoin went up from essentially $27,000 to over $45,000 because of rising anticipation about spot ETFs.
For a long time, proponents of a spot bitcoin ETF has maintained that institutional and retail clients could benefit from price fluctuations in bitcoin without having to set up wallets or make other direct investments in the digital asset through a regulated trading product centred around the oldest cryptocurrency in the world.
The SEC commissioner and ardent proponent of digital assets, Hester Peirce, referred to the agency’s previous rejections of spot bitcoin ETF filings as confusing. The speaker declared that while it is a time for introspection, it additionally serves as a moment to rejoice. On the contrary, SEC Commissioner Caroline Crenshaw stated that “substantial evidence indicates” that there is room for fraud and manipulation in the bitcoin spot market, and she thus dissented from the approval order. Repudiating the 2023 court ruling, she asserted that spot and futures goods are not equivalent. However, Samir Kerbage, Chief Investment Officer at Hashdex, described the win as “a monumental day in the history of digital assets.”