- After a decade of toing and froing, the first-ever spot Bitcoin ETF has finally been approved for trading in the United States.
- The funds are set to go live tomorrow, kick-starting a new era of TradFi/DeFi integration.
- A spot Bitcoin ETF will bring in several new players to the industry, including retirement funds and big institutions that would otherwise avoid digital assets.
- Experts suggest that these ETFs can generate upwards of USD $10B of revenue in their first year of trading.
It’s been nearly a decade since the Winklevoss twins (of Facebook fame) proposed the idea of a Bitcoin-based ETF to the Securities and Exchange Commission (SEC). In 2017, this request was shut down, with the regulatory board citing that digital currencies were not mature enough at that point. Seven years and hundreds of rejections later, the SEC has finally yielded, approving spot Bitcoin ETFs for the very first time.
Months of Drama Have Led to this Moment
It wouldn’t be an American legal matter without some drama, and the lead-up to the SEC’s approval of a crypto-based fund has more than delivered. In mid-2023, analysts with sources among the U.S. regulators became confident that a spot Bitcoin ETF was a matter of “when”, not “if”. But an entire book’s worth of action-packed sequences took place in the six months before approval was actually made:
The Importance of a Bitcoin ETF
A spot Bitcoin ETF allows investors to gain exposure to the digital currency without worrying about custody of their coins or using a crypto exchange. For the average investor, this is significant, as many want a piece of the BTC pie but don’t have the patience or trust in the world of DeFi.
But even more importantly, it brings several new opportunities to high-net-worth investors and institutions, including a tax-efficient and low-fee way to buy up Bitcoin. Coinbase’s Chief Operating Officer, Emilie Choi, spoke to the potential impact of an ETF in 2023:
RIAs, retirement funds and other institutions that have been precluded from this asset class historically will gain access to crypto for the first time.
Emilie Choi, Coinbase’s Chief Operating OfficerWhat’s Next for the ETF?
With the SEC’s approval of 11 spot Bitcoin ETFs, most of these products are set to start trading on major exchanges tomorrow. However, it may take a few months for burning questions to be answered.
It will be interesting to know what the premium will be for those investing in a Bitcoin ETF – this is the difference between the price of the underlying asset (BTC) and the fund’s share price. Additionally, many will be watching closely to see which institutions actually jump into the crypto game, versus those who choose to observe from afar. With initial estimates of spot ETFs raking in USD $2-3 billion in a matter of days, the influx of money into the crypto market could have a significant impact on the value of several coins. Bitcoin has already burst through the USD $47K (AUD $70K) barrier just a few hours after the announcement was made, and the USD $50K (AUD $74K) milestone is just around the corner.
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