U.S. Securities and Exchange Commission (SEC) officials announced the approval of Spot Bitcoin Exchange-Traded Funds (ETFs) late on Wednesday (Jan. 10), giving the green light to major participants to start offering this product from Thursday.
In recent years, the SEC consistently rejected proposals for Bitcoin Spot ETFs, expressing concerns about potential market manipulation. Up to this moment, existing ETFs linked to cryptocurrency were exclusively for investments in futures.
With this decision, released in a statement by SEC Chair Gary Gensler, BlackRock, VanEck, Invesco and Galaxy, ARK 21Shares, Grayscale, and other six issuers among the dozen expecting to launch Spot Bitcoin ETFs, will offer the possibility to invest in the digital asset.
Conversely, in the cryptocurrency ecosystem, there is an expectation that a substantial influx of dollars into the system will lead to notable fluctuations in the price of Bitcoin.
The approval of Spot Bitcoin ETFs takes place three months before the halving process, a scheduled event in the cryptocurrency realm which is also anticipated to contribute to an upswing in its price.
Spot Bitcoin ETFs: Fee Competition
Issuers of these financial products are already involved in fierce competition to offer the most competitive fees.
For instance, ARK Invest, led by Cathie Wood and partnering with 21Shares for the launch of a bitcoin ETF, initially declared a fee of 0.8%. However, on Monday, they announced that there would be no fees for the first six months.
These movements also involve major players, such as the highly anticipated Spot Bitcoin ETF from BlackRock, one of the world's biggest asset managers with $9.42 trillion in assets as of June 30, 2023.
The manager of the iShares group of ETFs, considered to be one of the Big Three index fund managers, also reduced the fee of its ETF iShares Bitcoin Trust, which will be listed and traded on Nasdaq Stock Market under the ticker symbol "IBIT.", according to the latest S-1 filings presented by the company this week.
Latest spot bitcoin ETF fees, according to CNBC:
- Bitwise (GBTC) 0.0% (0.24% after first six months)
- ARK Invest/21Shares (ARKB): 0.0% (0.25% after first six months)
- Invesco Galaxy Bitcoin ETF (BTCO) 0.0% (0.59% after first six months)
- iShares Bitcoin Trust (IBIT) 0.20% (0.30% after first 12 months)
- VanEck Bitcoin Trust (HODL) 0.25%
- Franklin Templeton Digital Holdings Trust 0.29%
- Fidelity Wise Origin Bitcoin Trust (FBTC) 0.39%
- WisdomTree Bitcoin Trust (BTCW) 0.50%
- Valkyrie Bitcoin Fund (BTF) 0.80%
- Grayscale Bitcoin Trust (GBTC) 1.50%
It's not clear how much new money will be flow into these funds in once a spot bitcoin ETF trades. Reggie Browne, GTS co-Global Head of ETF Trading & Sales, told Bloomberg, that the combined ETFs could have inflows.of about $2 billion-$3 billion. However, he explained that given the existing market capitalization of Bitcoin, which is close to $900 billion, these inflows do not seem substantial.
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