As appeals court rules in favor of Grayscale, a bitcoin spot ETF could be on the horizon

It’s been over a decade since the first application for a spot bitcoin ETF was filed. After a number of denials over the years, the U.S. Securities and Exchange Commission has approved all 11 applications from spot bitcoin ETF issuers, marking a potential watershed moment for the crypto industry and potentially opening the floodgates by making it easier for institutional investors and consumers alike to invest in the biggest digital asset.

The issuers are BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, ARK 21Shares Bitcoin ETF, Bitwise Bitcoin ETP Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Trust, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, Valkyrie Bitcoin Fund, Hashdex Bitcoin ETF and Franklin Bitcoin ETF. Six of the ETFs will be listed on Chicago Board Options Exchange (CBOE), three will be on the New York Stock Exchange (NYSE) and two will trade on Nasdaq.

The issuers’ fees range from as low as 0.2% to as much as 1.5%. ARK and 21Shares, BlackRock, Bitwise, Fidelity, WisdomTree, Valkyrie and Invesco and Galaxy are doing introductory waivers with zero fees (aside from BlackRock at 0.12%) for a limited time.

After the SEC approval, Bitcoin’s price was slightly higher on the day, around $45,700, and is up 161.7% from the year-ago date, according to CoinMarketCap data.

Spot-based ETFs basically allow investors to indirectly own an asset. When an investor buys shares in a spot-based ETF, they’re buying shares of the fund that owns that asset (e.g., BlackRock) instead of directly owning it. Futures-based ETFs use contracts that let investors buy or sell an asset at a predetermined price in the future, and also allow investors to own that asset indirectly through the fund they bought it from.

“The ETF is step one to bringing tried-and-true financial products and structures from Wall Street to digital assets that people understand,” Muneeb Ali, CEO of Trust Machines, told TechCrunch.

The only crypto-based ETFs in the U.S. that were approved before today were tied to futures contracts with bitcoin and Ethereum and are traded on the Chicago Mercantile Exchange. In 2021, BITO, the first bitcoin-linked futures ETF in the U.S., launched and immediately saw a lot of demand during its first year. It eventually grew to become one of the largest and most traded crypto ETFs, according to ProShares data.

ETFs can also lend legitimacy to the space and increase adoption from investors who couldn’t access crypto assets beforehand, said John Wu, president of Ava Labs. “With the ETFs, legitimization, protection and distribution becomes mainstream, and that is a watershed moment for the industry.”

Source link