The U.S. Securities and Exchange Commission (SEC) recently approved the first spot-based Bitcoin Exchange-Traded Funds (ETFs), marking a significant milestone in the cryptocurrency industry. The approval came after a decade-long wait since the first application by the Winklevoss twins. The anticipation was high, and the first trading day did not disappoint, with fund shares worth over $4.6 billion changing hands. Almost half of this volume was from the newly converted Grayscale Bitcoin Trust (GBTC) ETF, despite trading complications at some brokerages.
The SEC approved eleven different spot Bitcoin ETFs, all tracking the spot price of Bitcoin, albeit with slight differences in their fee structures. The GBTC, a flagship product of crypto asset management giant Grayscale, had been trading as a closed fund since 2013 and managed around $28 billion in Bitcoin before the approval of the spot ETFs. The green light from the SEC allowed GBTC to convert into a publicly tradable ETF.
However, due to GBTC’s significantly higher fees – 1.5% per year compared to an average of 0.3% with other providers – many trust holders switched their shares to the newly created funds. This resulted in the trust recording a substantial trading volume of $2.3 billion on the first trading day. The previous record was held by the BlackRock U.S. Carbon Transition Readiness ETF at $1.16 billion, closely followed by the first Futures Bitcoin ETF (BITO) at just over a billion dollars. BlackRock’s iShares Bitcoin Trust (IBIT) achieved a similar trading volume as the previous two record holders. With a combined volume of $4.6 billion, the launch of the spot Bitcoin ETFs can be considered a resounding success.
However, the approval by the SEC was not without controversy. The decision was narrowly passed with a vote of three to two. SEC Chairman Gary Gensler, who cast the decisive “yes” vote, expressed his continued skepticism towards Bitcoin in a detailed blog post. He noted that the majority of crypto assets violate federal securities laws and that Bitcoin is primarily a speculative, volatile asset used for illegal activities such as ransomware, money laundering, evasion of sanctions, and financing terrorism.
Despite these concerns, some brokers blocked trading with the newly launched spot Bitcoin ETFs. For instance, Vanguard, the second-largest provider of index products, refused to offer the Bitcoin products to its brokerage customers, as reported by the WSJ. The asset manager focuses on investment classes that are “building blocks of a balanced, long-term investment portfolio”.
Similar restrictions were reported at leading brokerages such as Citi, Merill Lynch, Edward Jones, and UBS. The Swiss banking giant, which has been skeptical about Bitcoin for years, did not comment on the matter. However, a UBS insider told Coindesk that some selected customers would have access to the Bitcoin ETFs. Citigroup also offers the products only to institutional customers, while Interactive Brokers does not allow Swiss customers to trade crypto products at all.
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| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇠🇺🇸 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | Hester Peirce, Gary Gensler, Caroline Crenshaw, Mark Uyeda |
| Companies | Grayscale Bitcoin Trust, Merill Lynch, Interactive Brokers, SEC, UBS, Citigroup, Citi, Edward Jones, Vanguard |
| Currencies | Bitcoin, US Dollar |
| Securities | Grayscale Bitcoin Trust, BlackRock U.S. Carbon Transition Readiness ETF, Futures-Bitcoin-ETF (BITO), Vanguard, BlackRocks iShares Bitcoin Trust (IBIT) |
