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 are BTC ETFs and how do they work?
ETFs, or Exchange-Traded Funds, are a hybrid between stocks and mutual funds. They provide a basket of assets such as stocks, bonds, or commodities that can be traded on major stock exchanges.
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Unlike mutual funds that are priced once at the end of a trading day, ETFs reflect real-time price fluctuations of their underlying assets. As a result, investors can buy and sell them like ordinary stocks.
On the other hand, BTC ETFs are a natural progression of this idea, catering to the demands of the Crypto industry. Essentially, it is an ETF that tracks the value of BTC.
Unlike owning BTC directly, investors sometimes need to engage in complex storage and security measures. BTC ETFs allow investors to invest in BTC in a familiar traditional form. This means that while investors can hold shares reflecting the value fluctuations of BTC through the ETF, they may not necessarily hold BTC itself.
The allure of 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 path to enter Crypto investments without the complexities of mastering 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 bodies like the SEC have remained cautious.
Existing list of spot BTC ETF applications
In this context, the current series of BTC ETF applications highlight a transformative moment in financial history, marking the intersection of traditional investment tools and digital assets. In fact, BTC has witnessed multiple financial institutions vying to create spot ETFs, providing investors with easier avenues for 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 frontrunners, having sought approval since 2021.
Due to concerns over market manipulation and insufficient investor protection measures, the SEC has previously rejected their application. However, Cathie Wood, CEO of Ark, remains optimistic. She speculates that the SEC will approve multiple ETFs simultaneously, with success depending mainly on marketing capabilities and effective communication.
Wood said, “Because these funds are essentially the same, ultimately it depends on marketing and information communication. We have been working on promoting our research depth since 2015.”
However, not everyone agrees with this view. Scott Farnin, legal representative of the US financial reform group Better Markets, 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 proposed rule changes have little effect in eliminating these threats.”
Nevertheless, BlackRock’s iShares BTC Trust Fund has still attracted interest. As one of the world’s largest asset management companies, BlackRock manages over $10 trillion in assets, making its application hard to ignore.
Sui Chung, CEO of Crypto Index Company CF Benchmarks, emphasized its dedication to market transparency and integrity, and also stated, “CF Benchmarks’ price data comes entirely from crypto exchanges, which adhere to the highest standards of market integrity and transparency, providing protection for investors. Also, BlackRock’s repeated participation indicates that BTC is still an asset of interest to some of the world’s largest financial institutions.”
Intensifying competition for BTC ETF
Bitwise Asset Management has also resumed its pursuit of a spot BTC ETF, just a few days after BlackRock’s application, demonstrating the intensifying competition in the industry.
Despite previous rejections 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 similar efforts, VanEck recently submitted a filing for its BTC Trust to the Cboe BZX Exchange. SEC Commissioners Hester M. Peirce and Mark T. Uyeda have expressed their concerns, indicating that the BTC Trust will still face significant challenges.
These two commissioners stated, “We believe that the SEC is using a different set of objectives than for other types of commodity ETPs, excluding these spot BTC ETPs from the exchanges we regulate.”
WisdomTree is also not backing down, resubmitting its application for the WisdomTree BTC Trust. Although both applications have been unsuccessful, they still hope to make investors aware of BTC’s price trends. The company’s dedication is similar to that of Invesco, a giant investment firm managing approximately $1.49 trillion in assets.
The applications from both companies emphasize the risks faced by US investors in the absence of a spot ETF, demonstrating 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, emphasizing the dangers of investors seeking high-risk alternatives. The company’s expertise and $11 trillion asset management scale make it a strong competitor.
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