A spot Bitcoin?ETF would track the price of the underlying cryptocurrency directly, rather than relying on futures contracts or other derivatives. This would provide investors with a more transparent and cost-effective way to gain exposure to the digital asset class.
BlackRock, the world’s largest asset manager, has not given up on its ambition to launch a spot Bitcoin?ETF in the US. The company has been in talks with the Securities and Exchange Commission (SEC) to address the regulator’s concerns and demonstrate the feasibility of such a product.
However, the SEC has been reluctant to approve any spot Bitcoin?ETF proposals, citing issues such as market manipulation, custody, liquidity, and investor protection. The regulator has repeatedly delayed or rejected applications from various firms, including VanEck, Valkyrie, and WisdomTree.
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BlackRock, which already offers two funds that invest in Bitcoin futures, believes that it can overcome these challenges and convince the SEC to greenlight its spot Bitcoin?ETF. The company has been working closely with the regulator to address its questions and provide evidence of the maturity and robustness of the Bitcoin market.
According to sources familiar with the matter, BlackRock has presented data and analysis on various aspects of the Bitcoin ecosystem, such as price discovery, volatility, arbitrage, trading volume, and custody solutions. The company has also highlighted the benefits of a spot Bitcoin?ETF for investors, such as diversification, hedging, and innovation.
BlackRock is confident that its spot Bitcoin?ETF would meet the SEC’s standards and expectations and hopes to receive a positive response from the regulator soon. The company believes that a spot Bitcoin?ETF would be a game-changer for the crypto industry and would attract significant inflows from institutional and retail investors alike.
Franklin Templeton, one of the world’s largest asset managers, has filed an amendment to its Bitcoin spot ETF application with the US Securities and Exchange Commission (SEC). The firm is seeking to launch the Franklin Templeton Bitcoin ETF, which would track the performance of Bitcoin based on the prices from selected spot exchanges. The ETF would not use derivatives or futures contracts, but rather hold Bitcoin directly in a custodial arrangement with NYDIG Trust Company.
The amendment, submitted on November 29, 2023, provides additional details on the proposed ETF’s investment objective, strategy, risks, fees, and valuation methods. The document also outlines how the ETF would comply with the SEC’s requirements for investor protection, liquidity, transparency, and market integrity.
According to the filing, the ETF would have a total annual operating expense ratio of 0.75%, which includes a management fee of 0.50% and other expenses of 0.25%. The ETF would trade on the NYSE Arca exchange under the ticker symbol FTBT.
The Franklin Templeton Bitcoin ETF is one of several spot Bitcoin ETF applications that are currently under review by the SEC. The regulator has not yet approved any such products in the US, despite growing demand from investors and increasing competition from other jurisdictions that have already authorized Bitcoin ETFs. The SEC has expressed concerns about the potential for fraud, manipulation, and volatility in the Bitcoin market, as well as the lack of reliable and consistent pricing data.
Franklin Templeton believes that its Bitcoin spot ETF would address these issues by using a robust methodology to select the spot exchanges that would provide the reference price for the ETF. The firm also claims that its custodial arrangement with NYDIG would ensure the security and safety of the Bitcoin holdings, as well as facilitate the creation and redemption of ETF shares.
Moreover, the firm argues that its Bitcoin spot ETF would offer investors a convenient and cost-effective way to gain exposure to Bitcoin without having to deal with the technical challenges of buying, storing, and transferring the digital asset.
The SEC has not yet announced a decision date for the Franklin Templeton Bitcoin ETF application, but it is expected to do so within 45 days of receiving the amendment. If approved, the Franklin Templeton Bitcoin ETF would be the first spot Bitcoin ETF in the US, and a major milestone for the crypto industry.
Paxos secures in principle approvals for Stablecoin Issuance and Crypto services in Dubai
Meanwhile, Paxos, a leading blockchain infrastructure platform, announced today that it has received in principle approvals from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to operate a regulated crypto-asset business and provide stablecoin services.
This is a significant milestone for Paxos, as it will be one of the first companies to offer regulated crypto services in the Middle East and North Africa (MENA) region. Paxos will be able to provide custody, trading, settlement, and issuance of digital assets to institutional and professional clients in ADGM.
Paxos will also be able to issue its own stablecoins, such as Paxos Standard (PAX) and Binance USD (BUSD), which are backed 1:1 by US dollars and audited monthly by a third-party firm. Paxos stablecoins are widely used across the global crypto ecosystem, with over $16 billion in circulation as of November 2021.
Charles Cascarilla, CEO and Co-Founder of Paxos, said: “We are thrilled to receive these in principle approvals from the FSRA, which demonstrate our commitment to operating at the highest level of regulatory standards. We look forward to bringing our innovative solutions to the MENA market and expanding access to the digital economy.”
CEO of the FSRA of ADGM, said: “We are pleased to welcome Paxos to ADGM’s leading and dynamic digital asset ecosystem. As a pioneer of blockchain technology and a provider of regulated crypto services, Paxos will contribute to the development and growth of this sector in ADGM and the wider region.”
The main features and differences between these two digital assets that are both pegged to the US dollar.
PYUSD is the stablecoin launched by PayPal, the payment processing giant, in August 2023. It is fully backed by US dollar deposits, US treasuries, and similar cash equivalents. On PayPal, you can buy and sell 1 PYUSD for 1 USD. PYUSD is designed for digital payments and Web3 environments, meaning that it can be used for online shopping, peer-to-peer transfers, smart contracts, decentralized applications, and more.
PYUSD is issued by Paxos Trust Company, a regulated entity that also issues USDP and other stablecoins. PYUSD is an ERC-20 token that runs on the Ethereum blockchain, so it can be stored in any compatible wallet and transferred to any Ethereum address.
USDP is another stablecoin issued by Paxos Trust Company. It was formerly known as PAX or Paxos Standard, and it rebranded to USDP in June 2023. Like PYUSD, USDP is also backed 1:1 by the US dollar and it is also an ERC-20 token on Ethereum. However, USDP has some features that distinguish it from PYUSD. For example, USDP has a lower gas fee than PYUSD, meaning that it costs less to send and receive USDP transactions on the Ethereum network.
This is because USDP uses a smart contract optimization technique called CREATE2 that reduces the amount of data stored on the blockchain. Another difference is that USDP has more integrations with other platforms and services than PYUSD.
For instance, USDP can be used on Binance Smart Chain, Solana, Polygon, Avalanche, and other blockchains that support cross-chain bridges. USDP can also be used on various decentralized exchanges, lending platforms, yield farming protocols, and other DeFi applications that accept stablecoins.
PYUSD and USDP are both stablecoins that are pegged to the US dollar and issued by Paxos Trust Company. They are both ERC-20 tokens on Ethereum, but they have some differences in terms of gas fees, integrations, and use cases. Both PYUSD and USDP offer a way to access the benefits of cryptocurrencies without the volatility of other assets like Bitcoin or Ether.