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News/U.S. Market Braces for First Spot Bitcoin ETF

U.S. Market Braces for First Spot Bitcoin ETF

Van Thanh Le

Dec 8 2023

6 months ago4 minutes read
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SEC in Talks with Grayscale and 7 Other Spot Bitcoin ETF Applicants

The U.S. Securities and Exchange Commission (SEC) is actively engaging with key players in the cryptocurrency market. Their focus? Proposed spot Bitcoin exchange-traded funds (ETFs). 

This includes Grayscale, led by CEO Michael Sonnenshein. They discussed a rule change for NYSE Arca. The goal is to list and trade shares of Grayscale Bitcoin Trust (GBTC) as a spot Bitcoin ETF.

BlackRock's proposal for an iShares spot Bitcoin ETF was also on the table. Their focus was on in-kind and cash redemption models. This shows a deepening interest in diverse Bitcoin ETF structures.

Wall Street traders discussing under bright digital Bitcoin billboards.webp

Hashdex and the SEC discussed Hashdex's spot Bitcoin ETF proposal. Other meetings included Bitwise, VanEck, Fidelity, Invesco, and 21Shares. Each presented their unique spot Bitcoin ETF ideas.

Notably absent were discussions with WisdomTree, Valkyrie, or GlobalX. Despite these talks, the SEC hasn't approved any spot Bitcoin ETF yet. The crypto world is eagerly awaiting an announcement, expected by early January 2024. This decision could significantly impact the cryptocurrency investment landscape.

In November, Bitcoin was mentioned in 1,074 SEC filings, representing a 100% increase from October and indicating growing adoption and recognition. About 40 filings came from the Grayscale Bitcoin Trust. This surge in filings reflects excitement over the anticipated approval of the first spot Bitcoin ETF.  

BlackRock and Bitwise Revise Spot Bitcoin ETF Applications with SEC

BlackRock and Bitwise have recently updated their S-1 filings for spot Bitcoin ETFs with the SEC. This move highlights ongoing discussions about spot Bitcoin funds. Bitcoin's price has surged by 25% in the past month, now trading around $44,000. This increase fuels speculation about the SEC's potential approval of a spot fund.

In its updated filing, BlackRock includes new protocols for monitoring unusual price movements and enhancing anti-money laundering measures. An audited statement from PricewaterhouseCoopers is also part of the update. The filing emphasizes interactions only with vetted third-party service providers.

The SEC has delayed all spot Bitcoin ETF applications so far. However, the similarity in amendments by multiple issuers suggests active efforts to address regulatory concerns. BlackRock, a major player in the investment sector, has received $100,000 in seed capital for its Bitcoin ETF, named "iShares Bitcoin Trust." 

This ETF, distinct from those tied to Bitcoin futures, will invest directly in Bitcoin. The seed capital, crucial for creating the ETF's underlying units, saw an investor purchase 4,000 shares at $25.00 each on October 27, 2023.

Experts Uncover Potential 'Kill Switch' in BlackRock's Revised ETF Filing

BlackRock's latest Bitcoin ETF application update has sparked a flurry of discussions. The U.S. Securities and Exchange Commission (SEC), known for its meticulous approach, is working closely with Bitcoin ETF aspirants like BlackRock. 

The crux of the debate centers around a 'kill switch' in BlackRock's filing. This term, coined by industry experts, refers to a specific amendment in the application. It implies significant repercussions if Bitcoin were to be classified as a security in the U.S. Such a classification could drastically affect Bitcoin's tradeability and overall market value.

Legal pundits are weighing in, suggesting the SEC's hand in this language. Their concern hinges on Bitcoin's security status. This situation mirrors the XRP and Ripple Labs scenario, where SEC's intervention notably influenced XRP's market standing.

Caitlin Long, the CEO of Custodia Bank, links this development to a New Jersey bill. This bill categorizes virtual currencies as securities. On the other hand, legal expert Samuel Andrew views this as a standard precaution, downplaying immediate worries.

The ambiguity of this 'kill switch' – whether it's a stringent control measure or just a legal safety net – remains a topic of intense speculation.

BlackRock Could Transfer $200M from Private Bitcoin Trust to Spot ETF If Approved

BlackRock, Inc. reportedly eyes transferring a hefty $200 million from its private Bitcoin trust to an Exchange-Traded Fund (ETF). This strategic maneuver hinges on the green light from the U.S. Securities and Exchange Commission (SEC) for a spot Bitcoin ETF.

Pros:

  • Competitive Edge: BlackRock's move, if realized, could catapult it ahead of its rivals in the ETF arena. This could crown the firm as a frontrunner in the burgeoning crypto ETF market.
  • Pioneering Spirit: By reallocating funds ahead of time, BlackRock positions itself at the forefront, ready for the anticipated nod for a spot Bitcoin ETF. This forward-thinking approach might reap significant rewards.
  • Trust and Assurance: The firm's dedication to stringent monitoring and compliance, as reflected in its recent filings, promises to bolster investor and regulator confidence.
  • Market Diversification: BlackRock's earlier pitch for a spot Ethereum ETF and its selection of Coinbase as custodian underscore its commitment to diversifying within the crypto landscape.

Cons:

  • Regulatory Haze: Despite BlackRock's optimism for SEC approval, certainty remains elusive, and navigating the regulatory maze of crypto is notoriously complex.
  • Market Whirlwinds: The crypto market's notorious volatility means BlackRock's fortunes are closely tied to market fluctuations.
  • Rising Rivalry: The ETF space is crowded, with numerous financial players vying for dominance, potentially heating up the competition.
  • Risk Exposure: Shifting funds from the private Bitcoin trust to an ETF could expose BlackRock to new market risks, a factor that cannot be overlooked.

In this high-stakes game, BlackRock's strategy reflects a blend of ambition and caution, mirroring the dynamic and unpredictable nature of the cryptocurrency market.

Pando Submits US Bitcoin ETF Application Amid Market Surge

Swiss asset manager Pando is making waves in the U.S. financial market. They've filed for a spot Bitcoin ETF, joining 13 other contenders. 

While Pando is a newcomer to the U.S. Bitcoin ETF landscape, the firm has substantial experience with crypto exchange-traded products (ETPs) in the European market. Pando already boasts three spot crypto ETPs on the SIX Swiss Exchange, demonstrating its commitment to marking its presence globally in the cryptocurrency sector.

Their move follows an S-1 form submission to the U.S. SEC for their Spot Bitcoin Trust. The Bank of New York Mellon is set to administer this ETF. But, Pando's not an SEC-registered investment company, adding complexity to their bid.

The crypto market's buzzing. Bitcoin's price has shot up, crossing $44,000. This is its highest since May 2022. It signals market optimism for a U.S. spot Bitcoin ETF approval.

The crypto community is watching closely, especially with the Bitcoin halving event ahead. In just a day, over $175 million in Bitcoin short positions got wiped out. This highlights the market's eagerness and sensitivity to the SEC's upcoming decisions.

Hashdex Submits Revised Bitcoin Spot ETF Filing To The SEC

Hashdex, a renowned crypto asset management company, has revamped its proposal for a Spot Bitcoin ETF, submitting this revised version to the US Securities and Exchange Commission (SEC). This development, announced in August, marks a strategic shift as Hashdex plans to merge Spot Bitcoin with its Bitcoin Futures ETF, rebranding it as the Hashdex Bitcoin ETF.

Traders on a futuristic floor interacting with holographic crypto displays.webp

The latest filing with the New York Stock Exchange (NYSE) unveils a collaboration between Teucrium Trading LLC and Tidal Commodities Trust. They are set to sponsor the Hashdex Bitcoin ETF, signaling a notable partnership in the crypto ETF landscape. 

Despite these changes, Hashdex is committed to preserving its original investment strategies and objectives, ensuring that investors and market competitors are not adversely affected.

Hashdex Predicts First U.S. Spot Bitcoin ETF by Q2 2024, Followed by Spot Ether ETF

Hashdex stands out among 13 asset management firms vying for a spot in the U.S. Bitcoin ETF market. The company's optimism is palpable, with Dramane Meite, Hashdex’s head of product for the U.S. and Europe, expressing confidence in the imminent arrival of a U.S. spot Bitcoin ETF. 

Meite's forecast, detailed in his 2024 outlook report, anticipates the launch of a spot Bitcoin ETF by the second quarter of 2024, with a spot Ether ETF likely to follow suit.

Currently, Hashdex is among the select group of 13 asset managers who have put forward their applications for a spot Bitcoin ETF to the SEC. In a bold move, Hashdex has also proposed a hybrid Ether ETF, blending futures and spot contracts, awaiting regulatory green light.

Elegant office with a laptop displaying a Spot Bitcoin ETF application, city skyline in the background.webp

The path to launching these ETFs might witness a time lag between regulatory approval and the actual market debut, potentially spanning several weeks or months. The use of Form S-1 in these filings is crucial, as it informs the SEC about proposed rule changes and requires the nod from the agency’s Division of Corporation Finance.

Meite envisions the introduction of spot Bitcoin and Ether ETFs as a watershed moment. This would mark the first time established legacy asset managers delve into offering cryptocurrency products. The potential market impact is enormous, with the possibility of unlocking a $50 trillion market. 

This figure dwarfs the combined sizes of Europe, Canada, and Brazil's spot crypto exchange-traded products markets. The focus is expected to be predominantly on Bitcoin and Ether, given their widespread recognition and minimal differentiation from existing market offerings.

Reuters Insight: Bitcoin ETFs in Flux

Under the watchful eyes of Reuters, remarkable strides in discussions between the U.S. Securities and Exchange Commission (SEC) and asset managers about Bitcoin ETFs have been captured. The central theme of these conversations has unmistakably shifted to key technical specifics, which could be construed as a future nod of approval.

Reactions following a court ruling rejecting Grayscale's spot ETF application paint the SEC in a different light. Observably, the agency displays more willingness to delve into deeper conversations, chipping away at the silence that once shrouded such discussions.

Various elements came to the fore during these conversations. Custodianship agreements, frameworks for ETF creation and redemption, as well as making investors aware of inherent risks are among the highlighted areas.

Over time, the SEC’s worry about the susceptibility of Bitcoin to manipulation was a recurring theme. However, unfolding developments suggest a significant detour in these concerns. Asset managers have reportedly managed to assuage SEC's manipulation fears, positioning surveillance arrangements with exchanges like Coinbase as a protective barrier.

Futuristic stock exchange floor bustling with traders and digital screens, symbolizing global Bitcoin ETF trading.webp

Estimates point towards the potential birth of an initial demand spike of up to $3 billion, should a spot Bitcoin ETF become a reality. This figure is a testament to the latent market hunger for such a product.

Notable market players have expressed their predictions about this unfolding scenario. ARK’S CEO Cathie Wood, for instance, envisions a scenario involving the simultaneous birth of various ETFs. This event, she believes, would open up a smorgasbord of comparative opportunities for investors.

Meanwhile, Michael Sonnenshein, the helm of Grayscale Investments, exudes optimism. His company's active involvement with the SEC, coupled with the substantive nature of queries coming their way, acts as a much-needed boost of confidence.

Signals suggest a noticeable uptick in amendments to applications. This trend is buttressed by the recent involvement of staff from SEC Chair Gensler's office in aforementioned meetings. 

Fragmented Bitcoin connected to a gavel, stock market bull, and digital padlock.webp

Meanwhile, Gensler's silence on these filings remains deafening, giving no public inclination of approval. His well-documented history of skepticism towards cryptocurrencies and concerns about fraudulent behavior in this space tend to shroud the approval path in uncertainty.

Against this backdrop is an interesting collaboration. 21Shares president Ophelia Snyder identifies a notable “pattern break” in regulator engagement. This shift, she notes, indicates a different approach by the SEC. 21Shares and Ark make up two parts of the 13 spot Bitcoin ETF applicants guild.

Many applicants are leaning on Coinbase as a trustworthy custodian and an integral part of their surveillance-sharing framework. This paints Coinbase as a key player in the rapidly evolving ETF space.

A collective positive sentiment emanates from ETF experts such as Bloomberg's Eric Balchunas and Van Buren Capital's Scott Johnsson. They perceive these amendments as a stride in the right direction.

While optimism blooms in some quarters, opposition remains. A striking example of this dichotomy is JPMorgan CEO Jamie Dimon's stance on bitcoin. The CEO’s pessimism contrasts sharply with the surging interest and positive expectancy in the crypto ETF landscape. 

Yet, the evidence suggests a growing momentum towards the spot Bitcoin ETF’s potential reality with formative conversations and active preparations driving this journey. Only time will tell where this road leads. But the industry is watching, poised for exciting changes.

VanEck's Spot Bitcoin ETF Application Adds Spice with "HODL" Ticker

VanEck, an investment manager specializing in niche markets, has brought a playful edge to its spot Bitcoin ETF pursuit. In a recent amendment to their Form S-1 filed with the U.S. Securities and Exchange Commission (SEC), VanEck revealed the proposed ticker symbol for its ETF as "HODL". 

This term resonates with the crypto community, usually illustrating a hold-on-for-dear-life approach to asset management. The strategic choice of the "HODL" ticker aims to appeal to retail investors familiar with the crypto lingo. However, it does face the risk of alienating older generations unfamiliar with such terminology. 

This isn't the first time that fun has been infused into ticker symbols. Valkyrie previously applied for the "BTFD" ticker for its ETF, standing for "buy the f****** dip". Such attempts at novelty attract attention in the crowded ETF space.

VanEck already commands a solid retail investor base from its array of niche investments. Hence, the "HODL" ticker for the Bitcoin ETF seems to be a part of its well-crafted strategy. 

brave_screenshot_www.vaneck.com.png
BTC estimated full cycle return. Source: VanEck

VanEck's confident steps in the Bitcoin ETF application process underpin a more significant forecast. The firm predicts a transformative inflow of $2.4 billion into Bitcoin ETFs in the first quarter of 2024. This coincides with the projected launch of spot Bitcoin ETFs and their potential to redefine the crypto market. 

Investors and crypto enthusiasts alike are keenly watching this forecast and the anticipated market expansion. With Bitcoin's perceived resistance to government meddling, the demand for this "hard money" asset continues to surge. The expected access facilitated by Spot Bitcoin ETFs will diversify the participant base, drawing more players into the market. 

Despite the notorious market volatility, VanEck projects Bitcoin's price to remain buoyant above $30,000 in early 2024. The Bitcoin halving event scheduled for April 2024 is predicted to further bolster its price. 

Exciting times lie ahead, according to VanEck, with a possible all-time high for Bitcoin by late 2024, potentially seeing it soar to $100,000. As more investors, both seasoned and new, look to capitalize on this forecast, the "HODL" ticker could become as ingrained in investor jargon as the strategy it represents.

Bitcoin ETFs: DTCC Listings & SEC Approval Speculation

Fidelity's proposed Wise Origin Bitcoin Trust ETF (ticker: FBTC) has appeared on the DTCC's list of new securities, following BlackRock's iShares Bitcoin Trust ETF, sparking speculation about SEC approval.

The Depository Trust and Clearing Corporation (DTCC) holds a vital role in settling trillions of dollars in securities transactions daily.

While both Fidelity's and BlackRock's Bitcoin ETFs await SEC approval, being listed on the DTCC site is a customary step before ETF launches.

A slew of asset managers, including industry giants like Grayscale, VanEck, and WisdomTree, are seeking SEC approval for spot Bitcoin ETFs.

According to Bloomberg ETF analyst James Seyffart, there's potential for a wave of Bitcoin ETF approvals in early 2024, with a decision window possibly opening on January 5-10.

Seyffart predicts that any SEC orders approving Bitcoin ETFs are likely to be announced on January 8, 9, or 10.

Back in October, the news of BlackRock's DTCC listing caused an 11% surge in Bitcoin's price within 24 hours, briefly pushing it above $35,000.

Conclusion

The cryptocurrency landscape is on the cusp of a transformative era with the potential approval of Spot Bitcoin ETFs. This development, eagerly anticipated by 2024, could revolutionize crypto investments, offering new avenues for market participation and signaling a significant shift in the traditional financial sector's approach to digital assets.

Frequently Asked Questions

1. What does a Spot Bitcoin ETF entail? 

A Spot Bitcoin ETF involves an exchange-traded fund that directly buys and holds Bitcoin, allowing its performance to track the prevailing crypto coin prices on the market directly.

2. Which companies are in discussions with the SEC for Spot Bitcoin ETFs? 

Grayscale, BlackRock, Hashdex, Bitwise, VanEck, Fidelity, Invesco, and 21Shares have been in talks with the SEC about their ETF proposals.

3. What is the significance of BlackRock and Bitwise's updated S-1 filing? 

The updated filing indicates an ongoing dialogue between the issuers and the SEC on spot Bitcoin funds, including monitoring unusual price movements, compliance with anti-money laundering laws, and interaction with vetted third-party service providers.

4. What is notable about Pando's Spot Bitcoin Trust filing? 

Pando's filing is significant as it marks the firm's entry into the US Bitcoin ETF landscape, adding to the existing 13 companies vying for SEC approval despite not being registered as an investment company with the SEC.

5. Why is the approval of a spot Bitcoin ETF important to the cryptocurrency market? 

The approval of a spot Bitcoin ETF could potentially unlock a $50 trillion market, surpassing the combined market sizes of Europe, Canada, and Brazil's spot crypto exchange-traded products markets. This would also mark the first time legacy asset managers offer cryptocurrency products.

This article has been refined and enhanced by ChatGPT.

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