The battle for bitcoin supremacy has begun.
No less than 10 fund companies have filed the necessary paperwork to launch a spot bitcoin exchange-traded fund (ETF) and await a final decision from U.S. financial regulators on whether they can start trading this week.
Bloomberg Intelligence ETF analyst James Seyffart compiled a list on X of funds hoping to win approval this week, with proposed fees ranging from Grayscale’s
GBTC
1.5% fee to Bitwise’s proposed 0.24% fee, to be imposed 6 months following the fund’s debut or after the fund reaches $1 billion in assets, whichever comes first.
Enthusiasm for a spot bitcoin
BTCUSD,
etf has grown in recent months after a federal judge ruled that the Securities and Exchange Commission was wrong to deny Grayscale Investment’s application to convert its bitcoin trust into an ETF.
A federal judge ruled last August that the SEC’s reasons for denying an application by Grayscale Investments to list a bitcoin spot ETF were “arbitrary and capricious” and in violation of federal administrative law.
The judge argued that the SEC’s decision to approve two bitcoin futures funds but to deny a bitcoin spot fund was a breach of the principle in the law that agencies “must treat like cases alike” because prices in the bitcoin futures market closely tracked those in the spot market.
The SEC first approved a bitcoin futures ETF in late 2021.
The SEC had argued that bitcoin spot markets could not be sufficiently surveilled to prevent fraud and manipulation, while bitcoin futures markets were overseen by registered futures exchanges with sophisticated surveillance capabilities.
The regulator has a Jan. 10 deadline to respond to appeals from ARK 21 Shares to list a bitcoin spot ETF, and experts believe that the regulator will greenlight all the applications at once to avoid favoring one company in a market characterized by winner-take-all dynamics.
The five SEC commissioners will reportedly hold a vote this week on whether to approve the rule changes necessary to list the ETFs, a decision that is often delegated to staff for less controversial products.
Crypto skeptics are lobbying the agency to vote down the rule changes in a last-ditch effort to block the debut of a bitcoin spot ETF.
“The approval…would be a historic mistake almost certainly leading to massive investor harm,” Dennis Kelleher, president and CEO of the financial reform advocacy Better Markets, wrote in a letter to the SEC Friday.
“The immense and unrelenting fraud and manipulation in the bitcoin market means that approving these products would expose millions of American investors and retirees to the very harms that the SEC exists to prevent,” he added.
Experts say that despite these protests and SEC Chair Gary Gensler’s avowed skepticism of the crypto industry, recent court rulings and the productive dialogue between sponsors and SEC staff signal that these products will likely win approval sometime this week.
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