One article to understand the progress and deadlines of all spot BTC ETF applications. Which ETF will be approved first?
One article to understand the progress and deadlines of all spot BTC ETF applications. Which ETF approved first?
Compiled by: Blockchain Knight
The crypto market has undergone a paradigm shift. A series of spot BTC ETF applications have reached the SEC, with each fund hoping to provide investors with a new channel to enter the digital gold rush.
Before delving into the current BTC ETF applications and deadlines, it is crucial to understand the concept of ETFs and their potential impact on the crypto industry.
What is a BTC ETF and how does it work?
ETF, short for Exchange-Traded Fund, is a hybrid between stocks and mutual funds. It offers a basket of assets, such as stocks, bonds, or commodities, that can be traded on major stock exchanges.
Unlike mutual funds, which are priced once a day at the end of the trading day, ETFs reflect real-time price fluctuations of their underlying assets. Therefore, investors can buy and sell them just like ordinary stocks.
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On the other hand, a BTC ETF is a natural evolution of this idea, catering to the needs of the crypto industry. Essentially, it is an ETF that tracks the value of BTC.
Unlike directly owning BTC, investors sometimes need to engage in complex storage and security measures. BTC ETF allows investors to invest in BTC in a familiar traditional form. This means that while investors can hold shares of the value of BTC through the ETF, they may not necessarily own BTC itself.
The allure of a BTC ETF lies in its potential to bridge the gap between traditional finance and the crypto industry. For investors accustomed to the regulatory environment of the stock market, ETFs provide an easier pathway to enter crypto investments without needing to master the complexities of digital wallets or decentralized exchanges.
However, the process of approving BTC ETFs is not without obstacles. Market manipulation, liquidity, and the inherent volatility of crypto industry assets are some of the reasons why regulatory agencies like the SEC have remained cautious.
Existing list of spot BTC ETF applications
In this context, the current series of BTC ETF applications highlights a transformative moment in financial history, marking the convergence of traditional investment tools with digital assets. In fact, BTC has witnessed multiple financial institutions vying to create spot ETFs, providing investors with an easier path to returns.
The SEC is evaluating these applications, and here is a detailed list of all spot BTC ETF applications:
The ARK 21Shares BTC ETF, a collaboration between Ark Investment Management and 21Shares, is one of the outstanding applications, and they have been seeking approval since 2021.
Due to concerns about market manipulation and inadequate investor protection measures, the SEC had previously rejected their application. However, Cathie Wood, the CEO of Ark, remains optimistic. She speculates that the SEC will approve multiple ETFs simultaneously, with success depending primarily on marketing capabilities and effective communication.
Wood said, “Because these funds are essentially the same, ultimately it still relies on marketing and communication. We are working hard to promote the depth of our research, and we have been doing this since 2015.”
However, not everyone agrees with this view. Scott Farnin, legal representative of Better Markets, a US financial reform group, believes that the spot BTC market is easily manipulated, bringing unnecessary risks to investors.
Farnin said, “First, the spot BTC market has artificially inflated trading volume due to rampant manipulation and money laundering transactions; second, this market is highly concentrated; finally, the BTC network relies on individuals and entities to maintain. These characteristics of the BTC network make spot BTC very vulnerable to manipulation by criminals, bringing unnecessary risks to investors and the public interest, and the proposed rule changes have little effect on eliminating these threats.”
Nevertheless, the iShares BTC Trust Fund of BlackRock has still attracted people’s interest. As one of the world’s most important asset management companies, BlackRock manages over $10 trillion in assets, making its application hard to ignore.
Sui Chung, CEO of CF Benchmarks, a crypto index company, emphasized its dedication to market transparency and integrity. He also stated, “CF Benchmarks’ price data is sourced directly from crypto exchanges, which adhere to the highest standards of market integrity and transparency, providing protection for investors. Furthermore, BlackRock’s multiple involvements indicate that BTC is still an asset of interest to some of the world’s largest financial institutions.”
Competition for BTC ETF Heats Up
Bitwise Asset Management has also resumed its pursuit of a spot BTC ETF, which is only a few days apart from BlackRock’s application, demonstrating the intensifying competition in the industry.
Despite being previously rejected by the SEC due to fraud and manipulation concerns, Bitwise remains steadfast. Matt Hougan, Chief Investment Officer of Bitwise, hinted at a cautious approach in approving spot ETFs.
In a similar effort, VanEck recently filed a document for its BTC Trust on the Cboe BZX Exchange. SEC Commissioners Hester M. Peirce and Mark T. Uyeda have expressed their concerns, stating that the BTC Trust will still face significant challenges.
These two commissioners stated, “We believe the SEC is using a different standard for these spot BTC ETPs than it is for other types of commodity ETPs, excluding these spot BTC ETPs from the exchanges we regulate.”
WisdomTree is also not backing down and has resubmitted its application for the WisdomTree BTC Trust. Although both applications have been unsuccessful, they still hope to educate investors on the price trends of BTC. The company’s dedication aligns with Invesco, a giant investment firm managing approximately $1.49 trillion in assets.
The applications of the two companies both emphasize the risks faced by American investors without spot ETFs, showing the urgency of their claims.
Finally, Fidelity Investments has also joined the ranks of BTC ETFs, and Wise Origin BTC Trust demonstrates its ambition. This 193-page application delves into the details of market risks and emphasizes the dangers of investors seeking high-risk alternatives. The company’s expertise and $11 trillion asset management scale make it a powerful competitor.