SEC Approves First Spot Bitcoin ETFs, Sparks Record $4.6B Trading Frenzy

The U.S. Securities and Exchange Commission (SEC) has officially approved the first regulated spot Bitcoin exchange-traded funds (ETFs) in the United States. The historic decision comes just one day after a false announcement, erroneously posted from the SEC’s official Twitter account, briefly rattled markets.

On January 10, the SEC gave the nod to the 19b-4 applications from 11 key players, including ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. This approval encompasses rule changes that enable the listing and trading of spot Bitcoin ETFs on their respective exchanges.

🔥 SEC Approved Spot #Bitcoin ETF.

Welcome 2024 😃

— Coinwaft (@coinwaft) January 10, 2024

The SEC’s historic decision paved the way for the first regulated exchange-traded product in the U.S. to provide investors with direct exposure to the price of Bitcoin without the need for direct ownership or concerns about self-custody. Investors can now purchase shares in ETFs holding Bitcoin as the underlying asset.

The approval comes over a decade after Cameron and Tyler Winklevoss’ initial application to launch the Winklevoss Bitcoin Trust in 2013. The SEC had consistently rejected all previous spot Bitcoin ETF proposals, citing potential market manipulation and fraud concerns.

However, the decision changed after Grayscale won a court case in August 2023, challenging the SEC’s denial of its application to transform the Grayscale Bitcoin Trust into a spot Bitcoin ETF.

With the regulatory hurdles cleared, attention has turned to the fees charged by these ETFs. Notably, BlackRock, the world’s largest asset manager, plans to charge 0.2% fees until the fund reaches $5 billion in assets under management (AUM). Bitwise closely follows at 0.24%, while Ark 21Shares and VanEck trail slightly with 0.25% fees.

A noteworthy exception is Ark 21 Shares, which will waive all fees for the first six months or until the product reaches $1 billion AUM.

Grayscale, currently holding the highest-fee Bitcoin ETF product, levies prospective investors a 1.5% fee rate.

Spot Bitcoin ETF Trading Frenzy Surpasses $4.6 Billion with Grayscale, BlackRock, and Fidelity Dominating.

The spot Bitcoin ETF trading frenzy continued its explosive trajectory on Thursday, witnessing over $4.6 billion changing hands across nearly a dozen U.S. spot Bitcoin ETFs. In a market where Grayscale, BlackRock, and Fidelity emerged as dominant players, the Grayscale Bitcoin Trust, now transformed into an ETF, took the lead with a substantial $2.3 billion volume.

HOME STRETCH: $IBIT has just passed $1b in volume today (will break $BITO's record) w/ group hitting $4.3b or $2.2b ex-GBTC (which isn't 'new' per se). Also good sign to see 4 issuers over $100m. Strong middle class in the works. Easily the biggest Day One splash in ETF history. pic.twitter.com/LeVJKvWj3V

— Eric Balchunas (@EricBalchunas) January 11, 2024

Simultaneously, BlackRock’s iShares Bitcoin Trust (IBIT) observed over $1 billion in transactions, marking a pivotal moment for the cryptocurrency industry and challenging traditional views on digital assets as investments.

Despite the groundbreaking nature of this event, some industry executives cautioned against Bitcoin’s perceived high-risk nature. Vanguard, the largest mutual fund provider, made a noteworthy statement, declaring that it currently has no immediate plans to offer the new batch of spot Bitcoin ETFs to its brokerage clients.

JUST IN: $7 trillion Vanguard blocks clients from buying spot #Bitcoin ETFs on their platform. pic.twitter.com/paLCdTJaJb

— Bitcoin Magazine (@BitcoinMagazine) January 11, 2024

This move by Vanguard adds an intriguing layer to the unfolding developments, raising questions about the varying strategies and risk perceptions among major financial institutions during this pivotal moment in the cryptocurrency market.