Anticipating a Historic Moment: The Race for the First U.S. Spot Bitcoin ETFs

Anticipating a Historic Moment: The Race for the First U.S. Spot Bitcoin ETFs
Photo by Martijn Baudoin / Unsplash

In a move signaling a potentially historic week in the world of cryptocurrency, multiple asset management companies have filed final amendments to their Form S-1s with the United States Securities and Exchange Commission (SEC). These filings indicate a heightened anticipation for the approval of the first spot Bitcoin exchange-traded funds (ETFs) in the U.S., a development eagerly awaited by investors and the broader crypto community.

The flurry of activity began on Monday, Jan. 8, as various applicants rushed to submit their amended applications before the Jan. 10 deadline, which many speculate could be the date when the first spot Bitcoin ETFs receive the green light from the SEC. Among the first to file was Valkyrie, an established asset manager, closely followed by a roster of notable names in the financial and investment sector including WisdomTree, BlackRock, VanEck, Invesco, and Galaxy. Other significant filings came from Grayscale (through an S-3 filing), ARK Invest, 21Shares, Fidelity, Bitwise, and Franklin Templeton.

These applications come at a time when Bitcoin’s valuation stands at approximately $46,543, underscoring the high stakes and intense interest in the cryptocurrency market. The S-1 amendments filed by these firms contain critical information about the proposed ETFs, including fee structures and details about market makers.

In a competitive twist, some applicants have proposed significantly reduced fees for trading their potential spot Bitcoin ETF products. ARK and 21Shares, for instance, announced their intent to waive a 0.25% fee for a six-month period post-listing for the first $1 billion in assets under management (AUM). Similarly, BlackRock’s Bitcoin ETF proposes a 0.3% fee, following an initial rate of 0.2% for either the first 12 months or until the fund reaches $5 billion in AUM.

Eric Balchunas, a well-known Bloomberg ETF analyst, commented on this developing ‘fee war’ among potential spot Bitcoin ETF issuers. Balchunas noted that while historically, fee reductions have not significantly impacted competitive dynamics, the unique context of these ETFs – all targeting the same underlying asset – might change the equation.

Another interesting aspect of these filings is the inclusion of details about the initial funding of these ETFs. BlackRock, for instance, disclosed the purchase of 227.9 BTC for $10 million as part of its initial seeding. ARK and 21Shares also outlined their plans to buy seed creation baskets worth approximately $437,000 to acquire Bitcoin in preparation for their ETF listings.

Grayscale Investments, diverging from the S-1 route, updated its S-3 form registration statement, setting a 1.5% fee for its spot Bitcoin ETF. The firm also named several prominent financial entities as its designated liquidity providers and authorized participants, including Jane Street, Virtu, Flow Traders, Flowdesk, Macquarie, and ABN Amro.

As of now, ten potential issuers have updated their S-1 filings, positioning themselves as frontrunners in the race to launch the first U.S. spot Bitcoin ETFs. This development is a significant milestone in the integration of cryptocurrency into mainstream financial markets and could set the stage for further institutional adoption of digital assets.

Fox Business correspondent Eleanor Terrett highlighted the significance of these filings, pointing out that these firms are theoretically ready to pioneer the U.S. spot Bitcoin ETF market. There is also speculation about Hashdex possibly joining this initial group, pending a last-minute filing.

In conclusion, the crypto and investment communities are on the edge of their seats as they await the SEC's decision on these applications. Approval of these spot Bitcoin ETFs would not only mark a major milestone for Bitcoin but also potentially open the floodgates for wider acceptance and integration of cryptocurrencies in the traditional financial ecosystem. As this week unfolds, all eyes are on the SEC as it deliberates on what could be a defining moment in the history of digital assets.