The race to launch a bitcoin exchange-traded fund (ETF) in the United States has reached a bureaucratic crescendo, with major Wall Street firms finalizing their offerings’ paperwork in anticipation of approval from the U.S. Securities and Exchange Commission (SEC). BlackRock, Fidelity, Invesco, Valkyrie, and Bitwise have all revealed key details about their prospective ETFs, including partnerships with trading firms and the fees they will charge customers if given the green light by the SEC.
ETF watchers expect the SEC to finally approve a spot bitcoin ETF in early 2024, ending years of stonewalling. More than a dozen firms are vying to enter the market by offering their own version of the easily investable product to investors who prefer to keep their bitcoin exposure alongside traditional assets in their brokerage accounts.
The recent rush of filings suggests that these firms are not willing to take any chances on timing. Analysts at Bloomberg predict that the SEC is likely to approve multiple issuers simultaneously to avoid favoritism. Consequently, the eager issuers are ensuring that all the necessary preparations are in place to be part of the first group to receive approval.
BlackRock initiated the filing frenzy by announcing JPMorgan and Jane Street as its authorized participants. This role is crucial in the ETF business as it involves ensuring that ETF prices closely track the value of their underlying assets. Other firms quickly followed suit with their own filings.
With little to differentiate one bitcoin ETF from another, the competition may come down to fees. Invesco and its partner Galaxy Digital have disclosed that they will waive fees for the first six months and for up to $5 billion invested. This undercuts Fidelity, which plans to charge 39 basis points. However, the size of the fund also matters. Bitwise has already secured $200 million in seed capital for its ETF, surpassing BlackRock’s $10 million. Additionally, investor preference may be influenced by the popularity of a particular fund at the outset.
The approval of a bitcoin ETF in the U.S. would be a significant milestone for the cryptocurrency industry, as it would provide a regulated and easily accessible investment vehicle for mainstream investors. It would also likely contribute to increased adoption and acceptance of bitcoin as a legitimate asset class.
While the SEC’s decision is eagerly awaited, it is important to note that the agency has previously expressed concerns about market manipulation and investor protection in the cryptocurrency space. Therefore, it remains to be seen how the SEC will address these concerns and what conditions it may impose on approved bitcoin ETFs.
In conclusion, major Wall Street firms, including BlackRock, Fidelity, and Invesco, are finalizing their paperwork for bitcoin ETFs in anticipation of approval from the SEC. The firms are leaving no room for chance and are preparing to be part of the first group to receive approval. The competition may come down to fees and fund size, with Invesco and Galaxy Digital offering fee waivers and Bitwise already securing significant seed capital. The approval of a bitcoin ETF would be a significant development for the cryptocurrency industry, providing mainstream investors with a regulated investment vehicle. However, the SEC’s concerns about market manipulation and investor protection remain to be addressed.