The race to launch a spot bitcoin exchange-traded fund (ETF) is heating up, with no less than 10 fund companies vying for approval from U.S. financial regulators. These funds are eagerly awaiting a final decision on whether they can commence trading this week.
Bloomberg Intelligence ETF analyst James Seyffart has compiled a list of the funds hoping to secure approval, each proposing different fees. Grayscale's GBTC has proposed a 1.5% fee, while Bitwise aims for a 0.24% fee, which will be imposed 6 months after the fund's debut or once it reaches $1 billion in assets, whichever comes first.
The excitement surrounding a spot bitcoin ETF has surged in recent months following a federal judge's ruling. The judge deemed the Securities and Exchange Commission's denial of Grayscale Investment's application to convert its bitcoin trust into an ETF as "arbitrary and capricious." The ruling stated that this denial violated federal administrative law.
The judge contended that the SEC's decision to approve two bitcoin futures funds while denying a bitcoin spot fund goes against the principle that agencies must treat similar cases equally. The prices in the bitcoin futures market closely track those in the spot market.
It's worth noting that the SEC initially approved a bitcoin futures ETF in late 2021.
Bitcoin Spot ETFs: Regulatory Decisions Awaited
The Securities and Exchange Commission (SEC) has raised concerns over the surveillance of bitcoin spot markets to prevent fraud and manipulation. In contrast, registered futures exchanges oversee bitcoin futures markets with advanced surveillance capabilities.
ARK 21 Shares has submitted appeals to the SEC, seeking approval to list a bitcoin spot ETF. The regulators have a deadline of January 10 to respond to these appeals. Speculations indicate that to avoid favoritism in a highly competitive market, the SEC will likely approve all the applications simultaneously.
This week, the five SEC commissioners are expected to vote on the rule changes necessary for the ETFs' listing. Typically, staff members handle decisions for less controversial products. However, due to the significance of this decision, the commissioners will be directly involved.
Critics of cryptocurrencies are urging the agency to reject the rule changes to prevent the debut of a bitcoin spot ETF. Dennis Kelleher, the president and CEO of financial reform advocacy group Better Markets, warns that approving such products without addressing the rampant fraud and manipulation in the bitcoin market would harm millions of American investors and retirees.
Despite these concerns and SEC Chair Gary Gensler's skepticism towards cryptocurrencies, recent court rulings and constructive discussions between sponsors and SEC staff indicate a high possibility of approval for these products by the end of this week.