The U.S. Securities and Exchange Commission (SEC) is expected to make a decision on several applications for spot bitcoin exchange-traded funds (ETFs) in the coming weeks. These products would allow investors to gain exposure to the price of bitcoin without having to buy or store the cryptocurrency directly.
Spot bitcoin ETFs differ from the futures-based bitcoin ETFs that have already been approved by the SEC, such as the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF). Futures-based ETFs track the price of bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), which may not reflect the actual spot price of bitcoin in the market.
Spot bitcoin ETFs, on the other hand, would hold actual bitcoins in custody and track their market price. This would potentially offer lower fees, higher liquidity, and more accurate price discovery for investors. However, spot bitcoin ETFs also face higher regulatory hurdles, as the SEC has expressed concerns about the risks of fraud, manipulation, and theft in the underlying bitcoin market.
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The SEC has set deadlines for several spot bitcoin ETF applications in January and February 2022, including those from VanEck, NYDIG, WisdomTree, Valkyrie, and Bitwise. However, these deadlines are not binding, and the SEC could delay its decision or seek additional information from the applicants. The SEC could also approve, deny, or institute proceedings to determine whether to approve or deny the applications.
The approval of spot bitcoin ETFs would be a major milestone for the cryptocurrency industry, as it would signal the SEC’s recognition of the maturity and legitimacy of the bitcoin market. It would also likely boost the demand and adoption of bitcoin among institutional and retail investors, as well as increase its price and volatility.
However, the approval of spot bitcoin ETFs is not guaranteed, and investors should be prepared for any outcome. The SEC may still have unresolved issues with the bitcoin market structure, custody arrangements, valuation methods, and investor protection measures. The SEC may also consider the potential impact of spot bitcoin ETFs on the broader financial system and the public interest.
Therefore, investors should do their own research and due diligence before investing in any bitcoin-related products, and understand the risks and rewards involved. Spot bitcoin ETFs may offer a convenient and accessible way to invest in bitcoin, but they are not a substitute for owning and securing bitcoin directly.
VanEck bought $72.5 million Bitcoin to seed its Bitcoin ETF
VanEck, one of the leading asset management firms in the US, has announced that it has purchased $72.5 million worth of Bitcoin to seed its newly launched Bitcoin exchange-traded fund (ETF). The VanEck Bitcoin Trust, which began trading on the Nasdaq on January 5, is the first Bitcoin ETF in the US to receive approval from the Securities and Exchange Commission (SEC).
The Bitcoin ETF is designed to provide investors with exposure to the price performance of Bitcoin without the hassle of buying, storing, and securing the cryptocurrency themselves. The trust holds Bitcoin in cold storage with a qualified custodian and tracks the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate, a real-time reference rate for the price of Bitcoin.
According to a filing with the SEC, VanEck bought 3,751.7 Bitcoins at an average price of $19,316.76 per coin on January 4, the day before the ETF launched. The total value of the trust’s assets as of January 5 was $74.1 million, which includes $1.6 million in cash and other receivables.
VanEck’s move is a significant milestone for the Bitcoin industry, as it marks the first time that a major US asset manager has launched a Bitcoin ETF. The firm has been one of the most persistent advocates for a Bitcoin ETF, having filed multiple applications with the SEC since 2017. VanEck’s latest proposal, filed in December 2020, was approved by the SEC in November 2021 after a lengthy review process.
The approval of VanEck’s Bitcoin ETF has also sparked hopes that more Bitcoin ETFs will follow suit in the near future. Several other firms, including Fidelity, WisdomTree, and Valkyrie, have also filed applications for Bitcoin ETFs with the SEC, but are still awaiting approval. Analysts believe that the launch of more Bitcoin ETFs will increase the liquidity, accessibility, and adoption of Bitcoin among institutional and retail investors, as well as boost its price and market capitalization.