The U.S. Securities and Exchange Commission (SEC) has officially granted approval for the first regulated spot Bitcoin exchange-traded funds (ETFs) in the United States. This historic decision follows a false announcement posted on the SEC’s official Twitter account a day prior, causing market confusion.
On January 10, the SEC approved the 19b-4 applications from various entities, including ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. The approval involves rule changes enabling the listing and trading of spot Bitcoin ETFs on respective exchanges.
This groundbreaking approval introduces the first regulated exchange-traded product in the U.S., offering investors direct exposure to Bitcoin’s price without the need for ownership or self-custody concerns. Investors can purchase shares in ETFs backed by Bitcoin as the underlying asset.
The ‘Error 404’ message, initially displayed on the SEC website after the approval, raised uncertainty about whether the document was intentionally pulled or a result of high site traffic. ETF analyst James Seyffart posted on X (formerly Twitter) that the commission may not have intended to release the approval document at the time it did but would likely repost it anyway.
This milestone approval comes over a decade after the Winklevoss twins’ initial 2013 application for the Winklevoss Bitcoin Trust. Previous denials by the SEC, citing concerns over market manipulation and fraud, were overturned after Grayscale won a court case in August 2023.
With the approval of spot Bitcoin ETFs, industry experts anticipate significant inflows. Galaxy Research’s Alex Thorn estimates inflows could reach $14 billion in the first year, while VanEck predicts approximately $2.4 billion in the first quarter of 2024.
The launch of a spot Bitcoin ETF requires SEC approval for both the S-1 (or S-3) and 19b-4 forms. On January 8, issuers filed amended S-1 and S-3 forms, revealing the fees they intend to charge. BlackRock, the largest asset manager, plans a 0.2% fee until reaching $5 billion in assets, followed by Bitwise at 0.24%, Ark 21Shares and VanEck at 0.25%. Ark 21Shares will waive fees for the first six months or until reaching $1 billion AUM. Grayscale currently holds the highest fee, charging a 1.5% rate for its Bitcoin ETF product.