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What does it mean when the SEC approves Spot Bitcoin Exchange-Traded Funds (ETFs)
Finally – Decision Day, Dropping-The-News Day, Deliverance Day, use any D word you may want to, and join the celebration! Because, as Commissioner Hester M. Peirce of the Securities and Exchange Commission (SEC) said: ‘Out, Damned Spot! Out, I Say ‘.
The Prelude
Prior to the official news, SEC Chair Gary Gensler had turned to X (formerly Twitter) to publish his warnings on crypto investments: a thread on Monday (January 08) which highlights the volatility, lack of compliance and loads of ‘fraudsters’ and a reminder of the many risks that come with crypto on Tuesday (January 09) . The crypto community, of course, sneered at another series of crypto bashing from him. But if we take a moment to really think about it, persistent warnings right before the SEC’s deadline on spot Bitcoin ETF applications could indeed be seen as hints from Gensler himself on the approval, right? That’s not to mention the SEC serving as a classic example of ‘secure your accounts/protect your identity ‘ on the same day after their official account on X got compromised and fake news on the spot Bitcoin ETF approval was posted there. Gensler ‘warned’ us, but most of us were too busy criticising him to realise his true intention, weren’t we?
Everything on the SEC incident is covered here: SEC’s Comedy of Errors: The Hilarious Fake Bitcoin ETF Approval
It would be a serious mistake to not talk about the fee war between spot Bitcoin ETF issuers as the approval was impending: BlackRock reduced the initial fee of 0.30% to 0.25%, 21Shares & Ark from 0.25% to 0.21%, Bitwise from 0.24% to 0.20%, WisdomTree from 0.50% to 0.30%, Invesco & Galaxy Digital from 0.59% to 0.39%, Valkyrie from 0.8% to 0.49%, and Fidelity from 0.39% to 0.25%. These issuers also offer even lower, but conditional fees. For example, BlackRock charges only 0.12% in the first year or for the first US$5 billion in AUM, and 21Shares & Ark will implement a fee waiver for the first 6 months or the first US$1 billion in AUM, whichever comes first.
Does It Mean Futures Bitcoin ETFs Are Whacked?
Less discussed but we’ve seen the question popping up every now and then in crypto convos across platforms. The biggest Bitcoin ETF in the U.S. as of today (January 11) is ProShares Bitcoin Strategy ETF with US$1.7 billion in AUM , which is a futures-based Bitcoin ETF. The biggest difference between a futures Bitcoin ETF and a spot ETF is the ownership of assets – a spot ETF engages in the purchases and management activities of actual Bitcoin, while a futures ETF simply provides investors with exposure to Bitcoin futures contracts on CME. Each type has its pros and cons, and just like how spot and futures markets for all assets have and will still coexist for diversification and hedging purposes, we expect futures ETFs to be hanging around to satisfy different risk appetites as well as investment needs.
As explained in our Bitget Academy article – Reasons To Look Forward To Spot Bitcoin ETF Approvals In The US, the greatest impacts of these approvals mean more capital flowing into crypto and proper recognition of crypto by U.S. authorities (finance and regulation-wise), who until recently stayed aggressive towards the whole space. We will soon provide summary on spot Bitcoin ETFs performance in the Bitget Hot Takes series in the upcoming weeks as another indicator of institutions’ sentiment.
Read our full article and learn what the Spot Bitcoin ETF approval means for an average investor.
Learn More At Bitget Academy
DDD-Day: Bitcoin ETF Is Approved
Does It Mean Futures Bitcoin ETFs Are Whacked? What does it mean for the average investor? And The Next Bitcoin Halving Is Just Around The Corner.
Celebrate the ETF Approval: Trade with Bitget & Win Your Share of 1 BTC
Let’s celebrate the ETF approval together! Bitget invites you to be part in our BTC trading event giving all our users an opportunity to earn BTC rewards. Offer ends 11 AM, January 16, 2024 (UTC).
Crypto ETFs in Hong Kong: The Next Big Thing?
Read more on Hong Kong’s crypto landscape; Opening the door to spot crypto ETFs; Outlook for the future of spot crypto exchange-traded funds (ETFs).
Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.
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