The future of Bitcoin ETFs (Exchange-Traded Funds) may be looking brighter, with several major financial firms, including BlackRock, Fidelity and Invesco, submitting applications to sell US “spot” ETFs tied directly to Bitcoin holdings. Wall Street and crypto-native firms are looking to develop ETFs that hold Bitcoin itself, rather than investing in Bitcoin futures. Despite previous rejections from the US Securities and Exchange Commission (SEC) due to concerns over volatility and potential manipulation, recent developments suggest progress is being made towards approval.
A spot Bitcoin ETF would mean that Bitcoin is directly bought and sold via exchanges, contrasting with Bitcoin futures which are contracts to buy or sell the asset at a specified price at a later date. These futures track the spot price indirectly on exchanges.
Currently, the ProShares Bitcoin Strategy ETF is the first Bitcoin futures ETF available in the US, while the Grayscale Bitcoin Trust holds Bitcoin directly. However, the recent application from BlackRock has sparked a flurry of similar ETF applications and resubmissions, suggesting a potential shift in the crypto investment landscape.
Despite this progress, the road to approval is expected to be long and drawn out, with the SEC expressing concerns over Bitcoin’s volatility, potential for fraud and manipulation, and whether funds would have the necessary information to adequately value tokens like Bitcoin. To allay these concerns, BlackRock and other issuers have proposed surveillance-sharing agreements to mitigate the risk of market manipulation and fraud.
With a potential approval of at least one spot Bitcoin ETF by the end of the year, the future of Bitcoin ETFs is still uncertain but certainly making strides towards becoming a reality.