What Is a Bitcoin ETF?
A Bitcoin ETF, or exchange-traded fund, is a type of investment vehicle that offers exposure to the cryptocurrency market. Specifically, a Bitcoin ETF allows investors to buy and sell Bitcoin without needing to directly hold the digital currency themselves. Instead, they can buy shares of the ETF, which represent ownership of the underlying bitcoin. This method provides a more regulated and secure way for investors to gain exposure to cryptocurrencies.
Types of Bitcoin ETFs
There are two types of Bitcoin ETFs:
|
ETF Type |
Description |
|
Spot |
Based on the current price of bitcoin and allows investors to hold actual bitcoin in their portfolios. |
|
Futures |
Based on the price of bitcoin futures contracts. These contracts speculate on the future price of Bitcoin and do not involve holding the underlying cryptocurrency. |
While both offer exposure to the crypto market, the main difference is that spot Bitcoin ETFs provide investors with direct ownership of bitcoin, while futures ETFs allow investors to speculate on the price movement of bitcoin without physically holding it. The introduction of a spot Bitcoin ETF is particularly important as it provides a way for investors to invest directly in Bitcoin without the complexity and security risks associated with holding the cryptocurrency themselves.
Bitcoin ETF Application History
The first Bitcoin ETF application was filed with the U.S. Securities and Exchange Commission (SEC) back in 2013 by the Winklevoss twins, owners of Gemini Exchange, and again with notable exchange BATS BZX, in 2016. However, the Securities and Exchange Commission (SEC) rejected the application, citing concerns about the lack of regulation and market manipulation in the crypto industry.
Since then, multiple other applications have been submitted, but none have received the green light from the regulatory body.
The reasons for the rejections vary, but one common concern raised by the SEC is the potential for fraud and market manipulation in the Bitcoin market.
Despite the setbacks, the hope for a Bitcoin ETF approval has not faded, as it is seen by many as a crucial development that could bring institutional investors into the cryptocurrency space. These institutional investors are believed to have the potential to inject significant liquidity into the Bitcoin market, further legitimizing it in the eyes of traditional investors.
.
Failed Bitcoin ETF Applications
The journey toward the approval of a Bitcoin ETF in the United States has been marked by numerous failed attempts. A Bitcoin ETF is an exchange-traded fund that tracks the price of Bitcoin and allows investors to gain exposure to this popular cryptocurrency without having to directly own it.
Additionally, the SEC has stated that the proposals for Bitcoin ETFs do not meet the requirements to prevent fraudulent and manipulative acts and practices.
Despite the rejections, the desire to create a regulated Bitcoin ETF persists, as it continues to be viewed as a potential game-changer for Bitcoin and the broader cryptocurrency market.
Below are the summaries for each entity that has filed for a spot in Bitcoin ETF with the U.S. SEC.
BlackRock
|
Key Information |
Details |
|
Filing Date |
June 15, 2023 |
|
Proposal |
Filed for SEC approval of a spot Bitcoin ETF. |
|
Details |
BlackRock’s filing emboldened other firms to resubmit applications. Proposed Coinbase as custodian and spot market data provider. |
|
Reference |
WisdomTree
|
Key Information |
Details |
|
Filing Date |
March 2021, Appeal 2022 |
|
Proposal |
Filed a new application for a spot Bitcoin ETF. |
|
Details |
Previously launched a Bitcoin ETF on Switzerland’s SIX stock exchange in 2019. Reject in Dec. 2021 and Oct. 2022. |
|
Reference |
Invesco Galaxy Bitcoin ETF
|
Key Information |
Details |
|
Filing Date |
September 2021 |
|
Proposal |
Filed a joint Bitcoin ETF with Galaxy Digital. |
|
Details |
Proposal for a physically-backed ETF, custody provider unknown. |
|
Reference |
Valkyrie Investments
|
Key Information |
Details |
|
Filing Date |
January 2021 and June 2023 |
|
Proposal |
Filed Bitcoin ETF application in 2023 with Coinbase. |
|
Details |
First Bitcoin ETF application denied December 2021. |
|
Reference |
Ark Invest
|
Key Information |
Details |
|
Filing Date |
June 2021 |
|
Proposal |
Filed for the Ark21Shares ETF. |
|
Details |
Led by Cathie Wood, Ark Invest is now on its third application for a Bitcoin ETF. |
|
Reference |
VanEck
|
Key Information |
Details |
|
Filing Date |
2018, December 2020 |
|
Proposal |
Launched the Bitcoin Strategy ETF and previously filed for a Bitcoin ETF. |
|
Details |
Previous attempt with SolidX in 2018. Withdrew filing Sept. 2019. SEC rejected the VanEck Bitcoin Trust in March 2023. |
|
Reference |
Winklevoss Bitcoin ETF (BATS BZX Exchange)
|
Key Information |
Details |
|
Filing Date |
2013 |
|
Proposal |
Filed for a Bitcoin ETF to be listed on the BATS BZX Exchange. |
|
Details |
SEC rejected the proposal in March 2017, and final rejection in July 2018. |
|
Reference |
Fidelity
|
Key Information |
Details |
|
Filing Date |
March 2021 |
|
Proposal |
Copied and Pasted BlackRock’s SEC proposal and submitted. |
|
Details |
Wise Origin Bitcoin Trust was rejected in January 2022. |
|
Reference |
Other Notables: Intercontinental Exchange (ICE), Nasdaq, Cboe
|
Key Information |
Details |
|
Filing Date |
Various |
|
Proposal |
Copied and Pasted BlackRock’s SEC proposal and submitted. |
|
Details |
Multiple rejections for Spot ETFs, but Futures were approved. |
|
Reference |
Everyone Hurries & Wait
Given BlackRock’s track record, the firm’s request for regulatory approval to offer a spot bitcoin exchange-traded fund seems likely to be approved, priming BTC for a surge of new capital.
Perspective: BlackRock, the world’s largest financial institution by assets under management, requested permission to offer its bitcoin ETF from the U.S. Securities and Exchange Commission on June 15, 2023. With a near-perfect record in receiving approvals, it’s clear that the firm is confident in future demand for Bitcoin and prepared to hold the asset in its custody.
More details: While the SEC has denied several previous applications for Bitcoin ETFs, BlackRock’s 575-to-one record of approvals suggests it will soon receive permission to welcome institutional capital to BTC.
- “This legitimizes the space hugely,” explained Austin Arnold of Altcoin Daily. “There’s been many, many, many bitcoin ETFs filed … that have not gotten approved. Now, BlackRock is much bigger, BlackRock is much more respected.”
Key takeaways: Critically, BlackRock is seeking approval for a spot ETF, which requires that it hold the asset it is offering. This could have significant price implications for Bitcoin.
The context: BlackRock is one of many firms awaiting a decision on applications to offer bitcoin-focused ETFs.
- As the SEC seems to signal a warming regulatory climate for Bitcoin, approval of several Bitcoin ETFs at once just before the upcoming Bitcoin reward halving event could create strong BTC price momentum.
· The optimism surrounding BlackRock’s application indicates the tide may be turning for SEC approval of Bitcoin ETFs. As a respected financial institution, BlackRock could pave the way for institutional investment and mainstream adoption of Bitcoin through an SEC-approved, regulated investment vehicle. The potential impacts on Bitcoin price and the maturity of the crypto market make this a development worth watching closely.
References