Major U.S. Exchanges Submit Final Bitcoin ETF Applications

The U.S. Securities and Exchange Commission (SEC) is poised to make a historic decision that could approve the launch of the country’s first spot Bitcoin exchange-traded funds (ETFs). This comes after numerous investment firms and stock exchanges have amended their filings in anticipation of approval, signaling a significant shift in the crypto industry.

Companies such as BlackRock, Grayscale, Fidelity, and others have submitted revised 19b-4 filings, following the SEC’s feedback last month. While approval isn’t guaranteed, the firms are hopeful, with some expecting the green light as early as next week.

The SEC’s expected move comes after years of resistance due to concerns over potential fraud and the unregulated nature of Bitcoin prices. However, the change in stance is not without conditions. The SEC has requested minor amendments to the filings, such as fee disclosures and market-maker identities, before giving the final nod.

The list of hopefuls for launching a spot Bitcoin ETF includes 13 companies: Grayscale Bitcoin Trust, Ark/21Shares Bitcoin Trust, Bitwise Bitcoin ETF Trust, BlackRock Bitcoin ETF Trust, VanEck Bitcoin Trust, WisdomTree Bitcoin Trust, Valkyrie Bitcoin Fund, Invesco Galaxy Bitcoin ETF, Fidelity Wise Origin Bitcoin Trust, Global X Bitcoin Trust, Hashdex Bitcoin ETF, Franklin Templeton Digital Holdings Trust, and Pando Asset Spot Bitcoin Trust.

These applications comprise two components: a 19b-4 filing and an S-1 approval. The former informs the SEC of a proposed rule change, necessary because a spot Bitcoin ETF is a new product requiring the exchanges—NYSE, Nasdaq, and Cboe—to provide trading rules. The latter is a document registering a new security with the SEC, detailing information about the specific security. The SEC needs to approve both before the ETFs can launch, with the deadline for the Ark/21Shares Bitcoin Trust 19b-4 filing set for January 10.

The fee structure of these potential ETFs has also been a topic of interest, with Fidelity’s Wise Origin Bitcoin Fund announcing a charge of 39 basis points (0.39%), Invesco’s Galaxy Bitcoin ETF setting its expense ratio at 59 basis points (waived for the initial six months and the first $5 billion in assets), and Ark/21Shares and Valkyrie charging 80 basis points. Grayscale currently charges a 2% fee but has committed to reducing this upon approval of its Bitcoin ETF application.

While the crypto industry awaits the SEC’s decision, the regulatory landscape remains complex. SEC Chair Gary Gensler has had a contentious relationship with the sector, engaging in several legal battles. Despite Bitcoin being ruled a commodity, there are no such rulings on other cryptocurrencies, leaving a regulatory gray area that the SEC has tried to navigate through enforcement actions.

The SEC’s forthcoming decision will be a significant milestone for the cryptocurrency industry, potentially paving the way for more widespread adoption and integration of digital assets into traditional financial systems.