Cue the champagne popping and fireworks—the much-anticipated approval for spot bitcoin exchange-traded funds (ETFs) has finally arrived.
On January 10, 2024, the Securities and Exchange Commission (SEC) gave the green light to over a dozen companies seeking to launch spot bitcoin ETFs in the US.
- The SEC has officially approved several spot bitcoin ETFs, allowing them to begin trading as soon as Thursday. This is a historic moment as spot bitcoin ETFs have been trying to launch for over a decade.
- The approvals came after the SEC suffered a court loss in 2023 that forced them to revisit their previous rejections of spot bitcoin ETFs. The court said the SEC failed to adequately explain its reasoning.
- The approved ETFs are from major asset managers like BlackRock, Ark Invest, Fidelity, Franklin Templeton, Grayscale, Invesco, VanEck, Valkyrie and others.
- The ETFs will charge management fees ranging from 0% to 1.5%, with some managers waiving fees temporarily to attract assets. The fees are as low as 0.12% for BlackRock.
- Bitcoin rallied leading up to the approval, rising from around $27,000 in September to over $45,000 by early January as optimism built around an ETF approval.
It’s a monumental moment over 10 years in the making. The asset management industry has tried repeatedly to launch spot bitcoin ETFs since 2013, when Cameron and Tyler Winklevoss first applied for the Winklevoss Bitcoin Trust ETF. But the SEC consistently denied or delayed applications, citing concerns over potential manipulation and lack of regulation around bitcoin trading.
That changed when the tide turned in 2023. Grayscale Investments took the SEC to court over the rejection of its bitcoin trust conversion to an ETF, and won. The court ruled that the SEC failed to adequately explain its disapproval reasoning. Essentially forced back to the drawing board, the SEC surprisingly moved forward with approvals for not just Grayscale, but a slate of other issuers that reads like a who’s who of the biggest names in finance.
The approved spot bitcoin ETF roster includes famous brands like BlackRock, Ark Invest, Fidelity, Franklin Templeton, Valkyrie and VanEck. Crypto-centric firms also made the cut, including Grayscale, Galaxy Digital, 21Shares, Bitwise and Hashdex. With the regulatory barriers finally lowered, these firms are ready to unleash spot bitcoin ETFs upon the eager investors of America.
And competition to gather assets will be fierce, as these issuers disclosed temptingly low management fees in their recent filings. BlackRock leads the pack with a miniscule 0.12% annual fee, while Bitwise and Ark Invest both waived fees entirely for the first 6 months or until gathering $1 billion in assets. Others like Fidelity and Invesco Galaxy are waiving fees for around half a year as well. It seems these issuers are betting that luring investor money early will allow their ETFs to reach sufficient scale.
Of course, this is first and foremost a big win for bitcoin. With the SEC seal of approval, spot bitcoin ETFs are expected to usher a flood of fresh institutional money into the crypto markets. Analysts estimate first-year inflows ranging from $2 billion to as high as $14 billion. That’s a lot of new bitcoin buying frenzy!
And the price paid attention. As the likelihood of approval rose through 2023 into 2024, bitcoin entered the start of a new bull market. The crypto rallied from around $27,000 last September to over $45,000 by early January, then surging near $47,000 right after the official SEC announcement.
While some expect short-term profit taking, bitcoin still seems poised to reach dazzling new heights throughout 2024 and beyond. Spot ETFs provide easy exposure to reputable bitcoin trading for both Wall Street and retail investors alike. The SEC stamp of approval also bolsters bitcoin’s credibility as a maturing digital asset class.
Of course, believers will say the power of bitcoin was always destined to prevail over all regulatory hurdles in due time. But at long last, the financial gatekeepers in suits have decided to officially let the people trade bitcoin how they want.
And that’s cause for celebration not just among crypto anarchists, but institutional investors, Robinhood traders and 401k holders nationwide!
The Bitcoin party has finally arrived—many years late—but just in time for bitcoin’s sweet 2024 bull run.
And before we sign off, let’s give thanks to Satoshi and Hal….
The computer scientist Hal Finney was a pioneering cryptographer and longtime cypherpunk who made major early contributions to the development of digital cash and privacy-enhancing technologies.
He is most famously known in the Bitcoin community for receiving the very first Bitcoin transaction from the still unidentified creator Satoshi Nakamoto on January 12, 2009.
On this day, January 10th, in 2009, Finney tweeted that he was “running bitcoin” – referring to the fact that he had successfully downloaded the original Bitcoin software, compiled it, and was operating a node on the fledgling Bitcoin network.
This tweet from Finney goes down in Bitcoin lore and provides proof that he was one of the first people besides Satoshi himself running the Bitcoin protocol software around its release in January 2009.
— halfin (@halfin) January 11, 2009
Just two days after tweeting on January 10th, Finney received the historic first Bitcoin transaction from Satoshi Nakamoto on January 12th as a test of the network. For this reason, Finney is considered the first Bitcoin recipient.
Thanks Satoshi and Hal. Here’s to many more years and the fulfillment of a vision …