Spot Bitcoin ETF in 10 questions. After the US Securities and Exchange Commission (SEC) approved applications for the spot Bitcoin Exchange Traded Fund (ETF), which is seen as critical for the cryptocurrency ecosystem, all eyes focused on what kind of transactions investors could make with these funds.
The approval of 11 different spot Bitcoin ETF applications by the US regulatory agency SEC has brought the cryptocurrency market to the top of the agenda again. Here are 10 questions and 10 answers about the spot Bitcoin ETF, which investors in the USA can access through stock exchanges:
Question 1: What is Spot Bitcoin ETF?
Spot Bitcoin ETF is an investment fund offered with the cryptocurrency Bitcoin. Like other exchange-traded funds (ETFs), they were offered for trading on stock exchanges.
Question 2: Where are applications made?
In the USA, ETF applications are made to the SEC. The approval or rejection decision is made by the SEC.
Question 3: Which companies applied?
Following the approval of the futures Bitcoin ETF in 2021, many asset management companies applied to the SEC for a spot ETF. The most notable was BlackRock, whose assets under management reached $10 trillion. Spot ETF applications reached nine, with applications from other companies such as VanEck and Fidelity. Grayscale applied for the conversion of the fund, defined as Trust and using the abbreviation GBTC, into a spot ETF, while Hashdex applied for the conversion of the forward Bitcoin ETF into a spot ETF. A total of 11 different spot Bitcoin ETF applications were made to the SEC.
Question 4: How was the decision taken in the commission?
The decision was taken by majority vote in the five-member commission. SEC Chairman Gary Gensler and members Hester Pierce and Mark T. Uyeda voted in the affirmative, and members Caroline A. Crenshaw and Jamie Lizarraga voted in the negative.
One day before the decision was announced, a post was shared from the SEC’s official X account that spot Bitcoin ETFs were approved, but SEC Chairman Gary Gensler announced that the SEC’s X account was seized and ETFs have not been approved yet. After the sharing, crypto money prices, especially Bitcoin, changed rapidly.
Question 5: Which ETFs were accepted before?
The first Bitcoin ETF application in the USA was made in 2013. The SEC rejected dozens of forward and spot applications until 2021. In 2021, ProShares’ forward Bitcoin ETF application was first accepted, and the ETF, using the BITO abbreviation, was opened for transactions on the Chicago Mercantile Exchange (CME).
Spot Bitcoin ETFs were also opened for trading in the USA with 11 applications accepted by the SEC on January 10. In the USA, a transaction volume of approximately 4.6 billion dollars was generated in these funds on the first trading day.
Spot Bitcoin ETFs started to be traded globally for the first time in Canada in 2021.
Question 6: What will the spot Bitcoin ETFs approved by the SEC do?
Both individual and institutional investors will be able to buy and sell on stock exchanges in the USA. Investors will also be able to access these assets through funds without opening transactions on cryptocurrency exchanges.
Question 7: On which exchanges will it be listed?
11 spot Bitcoin ETFs were offered to users on different exchanges. Applications of Bitwise, Hashdex and Grayscale companies were opened for trading on the New York Stock Exchange (NYSE), Valkyrie and iShares applications were opened for trading on Nasdaq, ARK 21 Shares, Fidelity, Wisdomtree, Invesco, VanEck and Franklin were opened for transactions on the Chicago Options Exchange (CBOE).
Question 8: Will there be transaction fees for ETFs?
Individual and institutional investors will pay transaction fees that vary depending on the company in their transactions through stock exchanges.
Question 9: Which organizations will undertake the custody duty?
Cryptocurrency institutions will mostly undertake the task of storing Bitcoins in ETFs that investors will buy through stock exchanges. While BitGo will keep the Hashdex ETF and Gemini will keep the VanEck ETF, Fidelity will also provide the custody service through its own platform. Coinbase, the US-based cryptocurrency exchange, will undertake the custody duty for the other 8 exchange traded funds.
Question 10: Which ETFs are next?
Following the Bitcoin ETF approval, all eyes turned to spot Ethereum ETF applications to the SEC. Spot Ethereum ETF applications from companies such as VanEck, ARK 21Shares and Hashdex are in the review process.
ETF analysts state that Ethereum applications may be approved in 2024. In addition, it is stated that applications for other cryptocurrencies may also be submitted to the SEC during the process.
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