Cryptocurrency Investors Await SEC Ruling on Bitcoin ETFs
Crypto investors are eagerly awaiting an imminent ruling from the SEC that will likely approve the trading of a spot bitcoin ETF, more than a decade after initial attempts were rejected.
13 Companies File for Spot Bitcoin ETF
Thirteen companies have filed for a spot bitcoin ETF, signaling significant interest in the trading of these products. Some of the companies include Grayscale Bitcoin Trust, Ark/21 Shares Bitcoin Trust, Bitwise Bitcoin ETF Trust, and BlackRock Bitcoin ETF Trust.
Each company has filed an application that provides information about the specific security and the way the product might be structured. The filing requires approval from the SEC.
The SEC is expected to approve the filings and rule changes before the products can trade. However, it is possible that the SEC may only approve some of the S-1 applications, as each application has differences.
Fee Structure and Approval Process
One area of interest for investors is the fee structure associated with these bitcoin ETFs. While some companies have announced their fee structure, such as Fidelity's Wise Origin Bitcoin Fund charging 39 basis points and Invesco's Galaxy Bitcoin ETF waiving the expense ratio for the initial six months, others have not yet disclosed their fees.
In terms of the approval process, there are two main components. The first is the 19b-4 filing, which requires a rule change under the Securities and Exchange Act of 1934. The second is the approval of S-1, which registers the new security with the SEC.
It is anticipated that once the 19b-4 filings are approved, the SEC will separately approve the S-1 applications. However, the outcome is uncertain as the applications have differences, and the SEC may choose to approve some but not all of the applications.
Uncertainty Surrounding Crypto Regulation
The SEC's ruling on bitcoin ETFs comes amidst a backdrop of uncertainty surrounding crypto regulation. SEC Chair Gary Gensler has been involved in several court battles with major crypto players and has taken a stance that many cryptocurrencies are securities falling under the SEC's purview.
Bitcoin has been ruled to be a commodity, but there is no clear federal ruling on other cryptocurrencies. The SEC has resorted to regulation by enforcement to assert its authority over the industry.
Notable ongoing cases include the SEC's lawsuit against Coinbase, accusing the company of violating registration rules, and the case against Binance and its founder Changpeng Zhao, which resulted in Zhao pleading guilty to money laundering violations and accepting a fine.
