The U.S. Securities and Exchange Commission (SEC) has approved a spot Bitcoin exchange-traded fund (ETF). For years, companies have sought approval for a spot Bitcoin ETF. However, U.S. regulators have delayed and rejected these applications, citing the risk of market manipulation and the inability to protect retail investors.
A total of 14 asset managers have submitted applications for approval of spot Bitcoin ETFs in the United States. While cryptocurrency-focused firms filed initial applications, interest in a spot Bitcoin ETF from Blackrock, the largest traditional asset manager, has fueled renewed optimism about the vehicle.
One important area where these companies' offerings differ is in management fees. According to SEC filings, Ark and 21Shares’ spot Bitcoin ETFs will charge a 0.80% management fee. Fidelity Intelligence Bitcoin Fund has the lowest management fee at 0.39%.
Spot Bitcoin ETFs can now be listed on U.S. stock exchanges, similar to other listed securities. Retail investors can participate in cryptocurrency trading directly through a brokerage account without opening an account at a cryptocurrency exchange. Additionally, ETFs eliminate many of the risks associated with holding cryptocurrencies directly on exchanges, including hacking and fraud.
Some brokers allow clients to invest in cryptocurrencies through a brokerage account. However, these investments are either standalone crypto products, such as Robinhood Crypto, or are offered in direct partnership with crypto exchanges, such as Interactive Brokers and Paxos.
While the company waited years to approve a spot Bitcoin ETF, CME has already begun trading Bitcoin and Ethereum ETFs tied to futures contracts.
While it took U.S. regulators several years to approve a spot Bitcoin ETF, many countries have already listed the vehicle. In addition to the United States, the spot Bitcoin ETF is already listed in eight jurisdictions: Canada, Germany, Jersey, Switzerland, and Australia.