SEC hasn’t approved Bitcoin ETFs, says X account was compromised
, Bloomberg News
The U.S. Securities and Exchange Commission said it had not yet granted approval of spot-Bitcoin exchange traded funds, despite a post on X that appeared from the regulator’s official account.
The post, which included a fake comment purporting to be from SEC Chair Gary Gensler, briefly fueled a jump in the price of Bitcoin. Traders have been speculating for weeks that the agency could approve several of the products as soon as Wednesday.
Gensler said from his X account that the post was a fake and that the agency hadn’t taken action.
About a dozen companies have applied to list ETFs backed by Bitcoin in the US. The SEC has until Jan. 10 to take action on at least one of those applications, and crypto insiders have speculated the regulator will use that date to announce a slew of decisions at once.
There are two technical requirements that must be fulfilled before a spot-backed Bitcoin ETF can start trading. First, the SEC must sign off on so-called 19b-4 filings by the exchanges that would list the ETFs. Second, the regulator must approve the relevant S-1 forms, which are the registration applications from the would-be issuers — a list that includes BlackRock and Fidelity.
The SEC is planning to vote on the exchanges’ filings, the 19b-4s, this week, Bloomberg News has reported. The regulator may or may not take action on the issuers’ applications, the S-1s, around the same time. If the SEC grants both sets of required approvals, the ETFs could start trading as soon as the next business day.
Why a pending U.S. decision on Bitcoin ETFs matters
, BNN Bloomberg
On the cusp of what could be a transformative moment for cryptocurrency, experts are split on what to expect from a pending U.S. securities decision that could expand options for Bitcoin investing.
On Wednesday, the U.S. Securities and Exchange Commission (SEC) is scheduled to release its decision on whether exchanges will be able to launch exchange-traded funds (ETF) backed by Bitcoin.
The change would allow investors to have exposure to the cryptocurrency, without actually buying it. It’s believed that the changes could go a long way toward normalizing crypto investments among traditional investors.
“This is a firm mark of approval and that should drive confidence to the industry overall,” Jess Houlgrave, COO of WalletConnect and former head of crypto for Checkout.com, told BNN Bloomberg in a television interview on Monday.
“I think we will now see a big push in terms of the narrative around ETFs, the narrative around investing in Bitcoin ETFs, which will see competition.”
Houlgrave, who has already seen increasing activity in crypto wallets in advance of the decision, believes it’s too close to the deadline for the SEC to reverse course and deny the applications.
“I think it’s highly unlikely we see the SEC pull something at the eleventh hour here,” she said. “We’re already now talking about pricing and fees, which is often really the last step when we see these ETFs. So to argue that something is going to come up at the last minute is unlikely.”
Several firms, including Grayscale, Fidelity and Invesco, have already released their fee structures for spot ETF trading, a sign that financial companies believe the regulations will be approved.
Markus Thielen, head of research and strategy at Matrixport, isn’t as confident the SEC will offer a swift approval.
“We have been massively bullish last year really predicting this market … but of course, a lot has been priced in and based on our assessments, we have looked at the ETFs and the whole filings, we think that there are actually three building blocks that some investors are maybe a little bit overestimating here,” he said in a television interview.
Thielen pointed to global surveillance regulations for the Bitcoin market that the SEC could want to see before approving, as most exchanges require global cooperation.
Thielen predicted the SEC could push the deadline approval back a couple of months in order to further study the matter.
WHAT WILL HAPPEN TO BITCOIN PRICES?
Regardless, Wednesday’s announcement will impact the price of Bitcoin.
Thielen worries if the ruling comes down against spot Bitcoin ETFs, prices of the coins could fall as much as 20 per cent in January, while an approval will shoot prices higher, but risks a quick sell-off.
“The risk-reward might be better to just hedge yourself, or go a little bit short through the options and protect yourself,” he said.
On Monday, the price of Bitcoin climbed above $47,000 for the first time since April 2022 in advance of the ruling.
With files from Bloomberg News
Grayscale’s 1.5% fee is higher than spot
Bitcoin ETF competitors like Fidelity, Invesco
, Bloomberg News
As spot Bitcoin ETF hopefuls rush to file their final documents with U.S. regulators, a key difference is emerging among the applicants in their proposed fee structures.
At the top end: The Grayscale Bitcoin Trust, which would carry a 1.5-per-cent fee if the U.S. Securities and Exchange Commission approves its conversion into an exchange-traded fund. While that would be lower than GBTC’s current two-per-cent fee, it comes well above its competitors.
The race-to-the-bottom on fees is a feature of the highly competitive US$8 trillion US ETF industry, where even a couple of basis points of difference can translate into millions of dollars worth of inflows.
While GBTC has an enormous advantage in existing assets — it boasts $27 billion in assets as a trust since its 2013 inception — its competitors will charge a fraction of its proposed expense ratio.
Bitwise and Ark / 21Shares are offering an initial sweetener of zero fees for the first six months or the first $1 billion in assets, whichever comes first. After that, their fees rise to 0.24 per cent and 0.25 per cent respectively.
VanEck’s HODL product would charge 25 basis points. BlackRock intends to charge 0.2 per cent for the first year or until it reaches $5 billion in assets, with 0.3 per cent as its eventual fee.
“This fee war is best possible situation for end investors,” said Bloomberg Intelligence ETF analyst James Seyffart.
Grayscale said they expect that GBTC would “continue to be a best-in-class offering for investors”, and cited their “liquidity, tight spreads, high trading volumes, and a decade-long track record of operational success”.
Crypto insiders are counting down to Wednesday, when the SEC faces one of its key deadlines to take action on pending spot Bitcoin ETF applications.
With assistance from Emily Nicolle.
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