For the past several months, the main event in crypto has been the looming approval of spot Bitcoin exchange-traded funds (ETFs). The new ETFs have gone through a lengthy application process with the Securities and Exchange Commission (SEC), with several amendments, meetings and lengthy filings — a process that has brought immense hype to Bitcoin.
The ETFs are expected to bring a new host of investors to the token. This is because the ETFs improve upon the current Bitcoin ETFs, which use futures to loosely track the price of Bitcoin. This results in price discrepancies between the current ETFs and Bitcoin, as well as high fees. For example, The ProShares Bitcoin Trust (BITO) is up just over 100% in the last year, but Bitcoin is up well over 150%. Grayscale Bitcoin Trust (GBTC) is another futures-linked ETF, and it charges fees of 2%. This is well above the average for ETFs.
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The spot ETFs hope to solve these issues. Instead of using futures, they will hold the Bitcoins themselves and use this to create shares of an ETF. This eliminates the price difference that exists with the current futures ETFs. Additionally, the spot ETFs have low fees, with most around 0.25%. Some ETFs also have incentives that offer smaller or even no fees for some of the first buyers. For example, the ARK and 21Share’s ETF (ARKB) is offering no fees on the first $1 billion in transactions.
While there have been several applications for spot Bitcoin ETFs in the past, most were denied or pulled back because of regulatory and infrastructure concerns. However, in April 2023, ARK and 21Shares announced a partnership to apply for their own spot Bitcoin ETF. This partnership was particularly notable due to ARK’s expertise in technology ETFs and 21Shares’ expertise in crypto asset management.
Several other applications came in the summer and fall of 2023, such as BlackRock Inc., Fidelity Investments, WisdomTree Inc., Grayscale Investments, Bitwise and VanEck.
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As more companies applied, met with the SEC…
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