Decade-Long Wait Ends as SEC Approves First Bitcoin Spot ETF in the U.S.
Summary:
The U.S. Securities and Exchange Commission approved the first regulated spot Bitcoin ETF, a decade after the initial application by Gemini co-founders Cameron and Tyler Winklevoss. Despite initial setbacks and ongoing debates, this breakthrough was achieved after a series of failed attempts by various asset managers. Eventually, applications from multiple asset managers were approved, paving the path for the first regulated spot Bitcoin ETF in the U.S. This allowed investors to gain direct exposure to Bitcoin, without the need for crypto wallets. The first spot Bitcoin ETF started trading with promising gains on the Nasdaq exchange.
Ten years after the inaugural application was lodged, the Securities and Exchange Commission (SEC) finally sanctioned the first official spot Bitcoin exchange-traded fund (ETF) in the United States, a monumental breakthrough for the crypto sector. The journey towards this significant landmark began on July 1, 2013, with Gemini co-founders Cameron and Tyler Winklevoss taking the initial steps by applying for the first spot Bitcoin ETF in America. Despite their determined efforts and extensive discussions with the SEC, the application was dismissed four years later. The finance world and various media outlets cited that Bitcoin was premature for the general public.
In the same year, the Grayscale Bitcoin Trust (GBTC) surfaced as an unrestricted, private trust for certified investors, gaining the green light from the Financial Industry Regulatory Authority (FINRA) to trade publicly in 2015. Even though it didn't qualify as an ETF, it became the first openly traded Bitcoin fund in America, later transitioning into a spot-based ETF.
Unsatisfied with the SEC's rebuff, the Winklevoss brothers instigated another attempt to win approval for a spot Bitcoin ETF, only to be refused by the SEC in 2018 citing Bitcoin's largely unregulated characteristics. Several people pondered if a Bitcoin spot ETF would ever gain approval, until Canada made a groundbreaking move. In 2021, financial news outlet Bloomberg's ETF analyst Eric Balchunas reported Fidelity Canada's launch of a spot Bitcoin ETF, making them the biggest asset manager with a Bitcoin ETF at that period.
In 2022, the SEC declined more proposals for a spot Bitcoin ETF filed by asset managers SkyBridge, Fidelity, Bitwise, and Grayscale. Consequently, Grayscale Investments filed a lawsuit against the SEC following the denial of their request to transform GBTC into a spot-based ETF.
Come 2023, asset management firms BlackRock and ARK Invest joined the quest for a spot in Bitcoin ETF, amplifying optimism that this novel Bitcoin investment channel would eventually attain approval. Aug. 29, 2023, saw Grayscale register a victory when U.S. Court of Appeals Circuit Judge Neomi Rao instructed the SEC to accommodate Grayscale’s petition for review.
By December 2023, various dialogues had transpired between the SEC and the spot ETF applicants. By the dawn of January 2024, the ETF issuers had finalized the documentation required for their spot Bitcoin ETF applications and were awaiting feedback from the SEC. An unexpected incident occurred on Jan. 9 when the SEC's official Twitter account announced the spot BTC ETF applications' approval. Nevertheless, SEC Chair Gary Gensler swiftly denied this, revealing a security breach on the SEC's Twitter account and confirming that the ETFs hadn't been approved.
The following day, the Cboe BZX Exchange submitted letters to the SEC announcing the endorsement of spot BTC ETF offerings from a host of asset managers. Even though the SEC was yet to fully affirm these, the letters from Cboe sparked rumors that the SEC might accord approval to multiple offerings concurrently.
On the same day, the SEC put the stamp of approval on 19b-4 applications filed by various asset managers. This action cleared the path for the maiden regulated spot Bitcoin ETF product in the United States, allowing investors direct access to Bitcoin without the need for digital wallets. On Jan. 11, the first spot Bitcoin ETF began trading with a pre-market volume of $2 million worth of shares and exhibited double-digit progress on the Nasdaq exchange.
Published At
1/11/2024 3:47:20 PM
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