In brief

• A number of hopefuls have filed proposals in the U.S. for an exchange-traded fund that would offer exposure to Bitcoin.
• To date, the U.S. Securities and Exchange Commission has rejected every application for a spot market Bitcoin ETF.

Editor’s note: This article was originally published in October 2021 and last updated on November 3, 2023, to reflect the current status of spot Bitcoin ETF applications.

Since the first application for a U.S. Bitcoin exchange-traded fund was filed in 2013, a spot Bitcoin ETF has become something of a holy grail for the crypto community.

An ETF is a publicly traded investment vehicle that tracks the value of an underlying asset; in the case of a Bitcoin ETF, that asset is Bitcoin. Advocates for a Bitcoin ETF argue that the complexities of exchanges, crypto wallets, and private keys still present a daunting barrier to entry into the crypto space for newcomers. A Bitcoin ETF would enable these investors to gain exposure to Bitcoin without actually having to hold their own cryptocurrency.

Bitcoin ETFs have sprung up around the world, in Canada, Brazil and Dubai—and in October 2021, ProShares’ Bitcoin futures ETF launched on the New York Stock Exchange.

However, to date, the U.S. Securities and Exchange Commission (SEC) has rejected every application for a spot Bitcoin ETF—which offers direct exposure to Bitcoin, rather than futures contracts. The SEC has repeatedly cited the potential for market manipulation among cryptocurrency traders among its concerns.

At the end of August, the agency, however, said it needed more time to evaluate several spot Bitcoin ETF applications, including those of BlackRock, Wisdom Tree Funds, Invesco and Galaxy Digital, and Valkyrie Funds.

In September, the SEC also made separate announcements for BlackRock, Bitwise, Invesco Galaxy Digital, and Valkyrie applications, as well as for GlobalX and Ark/21Shares ETF, once again delaying the decision.

Here are the Bitcoin ETF applications currently in play:

1.BlackRock

On June 15, the world’s largest asset manager, BlackRock—with over $9 trillion in assets under management as of Q1 2023—shocked the TradFi world when it filed an application for a Bitcoin spot ETF. The filing proposed Coinbase as the crypto custodian and spot market data provider, with BNY Mellon as the cash custodian.

According to Bloomberg Senior ETF analyst Eric Balchunas, the investment product, which is technically a trust, is functionally the “real deal”—a spot market ETF. BlackRock has also already locked horns with the SEC many times to put out ETFs, winning virtually every time with a score of 575-1, according to Balchunas.

BlackRock’s ETF filing was quickly praised by former Barclays CEO Bob Diamond. It also inspired WisdomTree, Invesco, and Valkyrie to make fresh applications to the SEC while helping to pump Bitcoin’s price back above $30,000 in June 2023.

Soon afterward, the SEC flagged concerns about the wave of Bitcoin ETF applications sparked by BlackRock’s filing, reportedly claiming that the applications weren’t clear enough. BlackRock quickly moved to refile its application in early July 2023, clarifying that it would be finalizing a surveillance agreement with Coinbase to use the crypto exchange as its custodian and for its spot market data for pricing.

By mid-July 2023, the SEC formally accepted BlackRock’s application for review, triggering a three-week comment period.

On October 18, BlackRock submitted an amended prospectus for its spot Bitcoin ETF application, with some notable changes in the new filing including acknowledgment of the competition in the race for Bitcoin ETF approval, as well as detailed explanations on the proposed product’s pricing and reporting mechanisms.

2.Bitwise

Bitwise first filed for its spot Bitcoin ETF filing back in October 2019, but was, like many other applications, rejected by the SEC. The Commission said the application didn’t meet legal requirements to avoid illicit activities including market manipulation.

Importantly, this filing from Bitwise was meant to trade on Bitcoin futures.

In 2021, the firm re-upped its application, opting to trade based on Bitcoin (rather than futures). The firm’s chief investment officer Matt Hougan took to Twitter at that time to say that the SEC’s concerns had been allayed with that filing.

The Commission didn’t quite agree, however, rejecting the filing again in June 2022.

Bitwise filed an amendment to its Bitcoin ETF application at the end of September 2023 to include fresh arguments, which, according to the firm, invalidate regulators’ explanations for depriving American investors of the product.

3.WisdomTree

New York-based asset manager WisdomTree already has experience running a Bitcoin ETF; it launched one on Switzerland’s SIX stock exchange back in 2019. It joined the ranks of U.S. Bitcoin ETF hopefuls in March 2021, filing an S-1 with the SEC that proposed listing shares in the WisdomTree Bitcoin Trust on the Cboe bZx Exchange under the ticker BTCW.

Following that, the SEC delayed and delayed and delayed again, with the regulator first inviting feedback from members of the public on the proposal and then announcing that it needed additional time to consider the “issues raised” in comment letters.

The SEC rejected WisdomTree’s application in late 2021—around the same time it rejected similar applications by Valkyrie and Kryptoin. WisdomTree filed a new application in mid-2023, shortly after BlackRock’s filing, which was docketed by the SEC on the same day as BlackRock’s application, entering the same three-week comment period.

The SEC delivered another blow to WisdomTree on October 11 as it once again rejected Cboe BZX Exchange’s application for the WisdomTree Bitcoin Trust, once again citing reasons similar to those behind multiple other rejections.

4.Invesco Galaxy Bitcoin ETF

Galaxy Digital and Invesco filed a joint Bitcoin ETF on September 22, 2021, called the Invesco Galaxy Bitcoin ETF. According to that filing, its ETF would also be “physically backed” by Bitcoin rather than via derivatives like futures. Invesco Capital Management LLC is the sponsor of the filing, but at present, it is unknown which firm will custody the Bitcoin for the filing.

The sponsor is a wholly-owned subsidiary of Invesco Ltd. The firm is also the fourth-largest ETF provider in the United States, a credential that may be helpful in getting the filing across the line. “For someone who’s been in the ETF business a very long time,” said John Hoffman, head of Invesco’s ETF strategies in the United States, “it’s incredibly similar to the early days of ETFs—the late 1990s, early 2000s.”

The Bitcoin ETF would be the first of a fleet of crypto-specific ETFs that the duo is hoping to list on American markets.

Invesco and Galaxy made a fresh application to the SEC in mid-2023 after BlackRock filed its own.

5.Valkyrie Investments

A relatively recent entrant to the race, asset manager Valkyrie filed its first application for a Bitcoin ETF in January 2021. The ETF would refer to the Chicago Mercantile Exchange’s reference price for Bitcoin and trade on NYSE Arca, “providing investors with an efficient means to implement various investment strategies,” the firm wrote in its proposal. Crypto custodian Xapo would secure the fund’s Bitcoin, holding it in cold storage.

In that filing, Valkyrie tacitly acknowledged the cryptocurrency’s volatility—one of the SEC’s key concerns regarding a Bitcoin ETF. “These potential consequences of such a Bitcoin Exchange’s failure could adversely affect the value of the Shares,” it said in a risk assessment.

In a familiar turn of events, the SEC delayed ruling on Valkyrie’s application—alongside applications by Kryptoin, WisdomTree, and Global X—before finally rejecting Valkyrie’s together with Kryptoin’s around Christmas 2021.

By early 2022, Valkyrie had managed to get a Bitcoin Mining ETF approved by the SEC. The instrument is backed by holdings in companies that on average use 77% renewable energy and includes sector heavyweights like Argo Blockchain, Bitfarms, Cleanspark, Hive Blockchain, and Stronghold Digital Mining.

In June 2023, Valkyrie filed another Bitcoin spot ETF application with the SEC. A month later, it updated its filing, listing Coinbase as its surveillance-sharing partner.

6.Ark Invest

Ark Invest, the investment firm led by Cathie Wood, filed its application for the Ark21Shares ETF in June 2021. ARK Invest has partnered with Swiss-based ETF provider 21Shares AG to offer the ARK 21Shares Bitcoin ETF; if approved it would trade on Cboe’s BZX Exchange under the ticker symbol ARKB.

The firm is also the first to reveal the fees for its Bitcoin ETF, with the filing indicating a planned fee of 0.95% payable to 21Shares, which would use the money to cover operating expenses.

Ark Invest already has exposure to Bitcoin at one remove, having invested in crypto exchange Coinbase, the Grayscale Bitcoin Trust and payments processor Square, which holds over 8,000 BTC on its balance sheet. CEO Cathie Wood is, unsurprisingly, an enthusiastic advocate of Bitcoin, arguing that the cryptocurrency represents “a new asset class” and that it could become a reserve currency.

Ark Invest’s ETF was rejected in early 2022. The company reapplied immediately after and was rejected in January 2023. Ark Invest is now on its third application. In June 2023, Ark Invest amended its SEC filing to include a surveillance-sharing arrangement similar to that of BlackRock—albeit not disclosing the crypto trading platform involved.

The SEC twice delayed its decision on Ark Invest’s ETF application in August and September, with the firm filing a second amended application for its spot Bitcoin ETF on October 11.

Notably, the latest version introduces additional risk warnings associated with the Bitcoin network, such as risks of a change to Bitcoin’s underlying code, that could negatively affect the price of the proposed product.

7.VanEck

VanEck is one of the earliest Bitcoin ETF applicants. Its first stab at a Bitcoin ETF—the VanEck SolidX Bitcoin Trust, in partnership with SolidX—came all the way back in 2018.

However, if VanEck thought that new blood at the SEC would mean a change in its position, they were in for a disappointment. The SEC repeatedly pushed back its decision on VanEck’s second Bitcoin ETF filing, before rejecting it in November 2021.

A third application followed in mid-2022 with the SEC once more prevaricating before finally rejecting it in March 2023.

VanEck refiled on June 22, 2023, for approval to launch the VanEck Bitcoin Trust on the Cboe BZX exchange. In mid-July, its application was added to the SEC’s official calendar, entering a 21-day comment period.

On September 28, the SEC announced a 45-day extension to the original deadline of November 11 for VanEck’s application, meaning the new deadline, similar to that of Ark Invest’s, is now set to December 26, 2023.

On October 27, the asset manager filed an amended application for the product, indicating that it might directly incorporate Bitcoin instead of cash to launch the product.

8.Fidelity/Wise Origin

March 2021 saw a rush of applications for Bitcoin ETFs, among them Fidelity’s Wise Origin Bitcoin Trust—perhaps unsurprisingly, given that mere weeks earlier its Director of Global Macro, Jurrien Timmer, said that Bitcoin has a “unique advantage” over gold. The Wise Origin Bitcoin Trust’s application would see Fidelity Service Company Inc serving as the administrator, and Fidelity Digital Assets holding custody of the Bitcoin underlying the ETF.

In May 2021, Cboe Global Markets filed a proposal to list Fidelity’s Bitcoin ETF, arguing that the SEC’s concerns about market manipulation have been “sufficiently mitigated” thanks to increasing investor participation and institutional adoption of the cryptocurrency, which have “facilitated the maturation of the Bitcoin trading ecosystem.” In the same month, the SEC began its review of Fidelity’s application.

In January 2022, Fidelity’s ETF was rejected.

Undeterred, Fidelity refiled its application at the end of June 2023; after the SEC raised concerns about the application, Fidelity quickly moved to name Coinbase as the market for its surveillance-sharing arrangement. It was added to the SEC’s official calendar on the same day as BlackRock’s application, entering a three-week comment period.

The Boston-based investment giant amended its Bitcoin ETF application on October 17, mostly focusing on the risk associated with such a product.

Failed Bitcoin ETF applications

There’s a long list of failed spot Bitcoin ETF applications; to date, the SEC has rejected every single one that’s crossed its desk. These are all the applications that have been rejected to date:

1.Global X

Global X Digital Assets, a fund manager with $31 billion in assets under management, filed its application with the SEC in July 2021. The proposed Global X Bitcoin Trust would trade on the Cboe BZX exchange, with the Bank of New York Mellon appointed as the trust’s administrator.

GlobalX’s portfolio spans 84 ETFs covering disruptive tech, equity income, commodities, and emerging markets. The proposed trust kept the identity of the custodian responsible for safekeeping its Bitcoin under wraps, though it did disclose that the custodian is a limited-purpose trust company authorized to provide digital asset custody services in the State of New York.

In September 2021, the GlobalX Bitcoin Trust was one of four Bitcoin ETF applications (including one Bitcoin futures ETF application) whose deadline was pushed back by the SEC. The regulator announced a revised date of November 21, 2021, on which it would approve or disapprove the application.

2.Kryptoin

Delaware-based Kryptoin made its first attempt at filing for a Bitcoin ETF in October 2019, with the proposed Kryptoin Bitcoin ETF Trust to be listed on NYSE Arca. The financial services company made a second stab at a Bitcoin ETF in April 2021, with the revised proposal for the Trust to be listed on Cboe’s BZX Exchange. Its amended filing listed the service providers that would assist in launching its ETF, including crypto exchange Gemini, which would provide custody for the Trust’s Bitcoin holdings.

By the end of that month, the application was officially under review by the SEC, which subsequently delayed its decision on the filing to July 27, 2021. “The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the comments received,” reads the June 9 announcement from the Securities and Exchange Commission (SEC).

In September 2021, the SEC once again pushed back the deadline for its decision on the Kryptoin Bitcoin ETF Trust, with a revised date of December 24, 2021. On this occasion, the SEC’s announcement highlighted the need for more time “to consider the proposed rule change and the issues raised in the comment letters that have been submitted in connection therewith.”

The SEC rejected Kryptoin’s application around the same time as Valkyrie’s, at the end of 2021.

3.First Trust/SkyBridge

In March 2021, hedge fund SkyBridge Capital submitted its filing for a Bitcoin ETF with the SEC. The firm, run by former White House communications director Anthony Scaramucci, already runs a Bitcoin Fund open to accredited investors with a minimum investment of $50,000; within weeks of its opening in January 2021, it grew to over $370 million.

That same month, Scaramucci was optimistic that a Bitcoin ETF could be approved by the end of 2021, telling Decrypt, “I’m hoping that with the introduction of Gary Gensler now into the regulatory rubric, and my understanding of where he’s coming from, although I don’t know it personally, is that possibly we can get an ETF in place by the end of the year.”

In May 2021, NYSE Arca submitted an application for a proposed rule change that would see SkyBridge Capital’s Bitcoin ETF listed on the exchange. That July, the SEC pushed back the review period for the Skybridge Bitcoin ETF before finally rejecting it in January 2022.

4.NYDIG/Stone Ridge

The New York Digital Investment Group and advisory firm Stone Ridge were quick to seize on the opportunity presented by the change of leadership at the SEC, becoming the second prospective ETF to file an application with the regulator in 2021. The filing, on February 16, came on an auspicious day for Bitcoin, with the cryptocurrency hitting $50,000 for the first time ever.

In March 2022, the SEC rejected NYDIG’s application together with Global X’s.

5.One River

One River Asset Management launched its bid for a Bitcoin ETF in May 2021, with its application for a carbon-neutral Bitcoin exchange-traded fund. With Bitcoin’s energy consumption and carbon footprint coming under increasing scrutiny, One River has committed to offsetting its carbon footprint by “purchasing and retiring carbon credits necessary to account for the estimated carbon emissions associated with the bitcoins held by the Trust” through environmental platform Moss Earth.

One River wheeled out the big guns in its bid to win over the SEC, bringing on former SEC Chair Jay Clayton as an adviser. Clayton, who joined the firm prior to its Bitcoin ETF application, headed the SEC during a period when it rejected every application for a Bitcoin ETF.

You can probably guess what happened in May 2022…

6.Galaxy Digital

In April 2021, crypto investment firm Galaxy Digital filed for a Bitcoin ETF; at the time, the eighth such application to land on the SEC’s desk. The proposed Galaxy Bitcoin ETF would be listed on the NYSE Arca. Galaxy Digital, which manages over $2.5 billion in assets, is also one of the largest institutional holders of Bitcoin, with 16,400 BTC in its treasury (worth nearly $500 million at current prices).

Billionaire Galaxy Digital founder Mike Novogratz weighed in on the SEC’s reluctance to approve a Bitcoin ETF at the 2021 Ethereal Summit, arguing that under the Trump administration the SEC had instead allowed the Grayscale Bitcoin Trust (GBTC) to flourish, which was “not as good for the consumer.” GBTC, Novogratz argued, saw the consumer “buying Bitcoin at a 20-30% premium being arbitraged by hedge funds into a closed-end fund—where an ETF would have been a much more elegant solution.”

7.Grayscale

Crypto investment fund manager Grayscale’s GBTC Bitcoin trust manages well over 600,000 BTC (worth almost $20 billion at today’s prices), and it’s made no secret of its desire to convert the trust into a full-fledged Bitcoin spot ETF. In October 2021, it began the process of doing so, formally filing a conversion application.

Were its application to succeed, Grayscale would be able to charge lower management fees, and it would be easier to move money in and out. Grayscale first filed an application to launch a Bitcoin ETF in 2016, but withdrew it a year later, stating that, “we believed the regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market.”

The lack of a full-fledged Bitcoin ETF has caused problems for Grayscale, and the wider Bitcoin market. In lieu of such a product, GBTC has picked up the majority of the U.S. institutional demand for Bitcoin. However, its shares sometimes trade at a negative premium, lower than the value of the underlying Bitcoin per share—but the fund isn’t allowed to redeem the shares for the Bitcoin itself, so the market can’t organically fix it.

If a Bitcoin ETF were approved, it would allow investors to redeem shares at any time. This would likely prevent a negative premium from appearing and help to keep the shares matching the value of the underlying coins.

It’s no surprise, then, that Grayscale has been laying the groundwork for a Bitcoin ETF for some time now, hiring ETF experts and inking a deal with BNY Mellon that would see the global investments company act as the service provider for GBTC. Were it to be converted into an ETF, BNY Mellon would provide transfer agency and ETF services.

In June 2022, the SEC rejected Grayscale’s application saying the company didn’t do enough to prevent possible fraud. Grayscale began litigating with the regulator immediately after, labeling its reason for rejection “illogical.”

In August 2023, Grayscale scored a victory in court, with a judge in the U.S. Court of Appeals for the D.C. circuit ordering that the SEC’s denial of its spot Bitcoin ETF application be reviewed. In a landmark decision, the court explained that the SEC “failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP.”

Grayscale called the decision a “monumental step forward” for American investors and the Bitcoin ecosystem—but others have cautioned that the SEC could yet deny Grayscale’s application on other grounds.

A long and winding road

The road toward a Bitcoin ETF has been a long one. Since the Winklevoss twins first filed for a Bitcoin ETF-like trust in 2013, the SEC has dragged its feet over the idea. It has repeatedly delayed making decisions on multiple Bitcoin ETFs over the last few years, causing firms like VanEck to pull their applications over fears the SEC would reject them.

The SEC’s main concerns about approving a Bitcoin ETF relate to the lack of transparency of trading information, market manipulation, and the notion that Bitcoin is fundamentally different from other assets it regularly deals with (for example, what happens in the case of a hard fork?). It is also worried about a lack of liquidity in the markets.

In conversation with Decrypt, Sui Chung, CEO of crypto indices provider CF Benchmarks, pointed out that in the early days, those filing for Bitcoin ETFs—such as the Winklevoss twins—were doing so from startups, albeit well-funded ones. But now the filings are coming from a new breed of applicants that are ready to meet these challenges.

“I think a lot of the areas that the SEC has previously voiced concerns around, filers [didn’t have] a lot of experience in the ETF market, particularly with the vagaries of the crypto markets and how they would sync up with equity markets through the ETF structure,” he said. He added that if constructed in the right way, a Bitcoin ETF need not be different from any other ETF listed on the stock exchange.

In August 2021, SEC chair Gary Gensler weighed in, noting that he “particularly looked forward to” the SEC’s review of “ETFs limited to these CME-traded Bitcoin futures.” His hint that the SEC is more favorably inclined towards Bitcoin futures ETFs than ETFs with physical exposure to Bitcoin sparked a rush of applications for Bitcoin futures ETFs, with the likes of Galaxy Digital and VanEck filing proposals.

Gensler again indicated his interest in Bitcoin futures ETFs in prepared remarks for the Financial Times “Future of Asset Management North America” conference, in September 2021. Gensler stated that earlier in the year, “a number of open-end mutual funds launched that invested in Chicago Mercantile Exchange (CME)-traded bitcoin futures.”

The SEC chair noted that the regulator has seen a number of filings for Bitcoin futures ETFs under the Investments Company Act of 1940, the so-called “‘40 Act”. “When combined with the other federal securities laws, the ’40 Act provides significant investor protections for mutual funds and ETFs,” Gensler said, adding, “I look forward to staff’s review of such filings.”

In October 2021, the long-drawn-out process finally reached its conclusion, with the first Bitcoin futures ETF debuting on the New York Stock Exchange. The ProShares BTC futures ETF nearly broke the trading record for any debuting ETF, trading almost $1 billion in its first day. The launch of ProShares’ ETF could open the floodgates for further Bitcoin futures ETF applications, though at least one contender has abandoned its plans; Invesco pulled the plug on its ETF application mere hours before the ProShares Bitcoin futures ETF launched.

Bitcoin ETFs around the world

While the U.S. has dragged its heels, other countries have pressed ahead. There are now multiple Bitcoin ETFs operating in countries such as Canada and Brazil, with Europe’s first Bitcoin ETF going live in August 2023. And there are a number of exchange-traded notes (ETNs) in Europe, which are very similar financial instruments.

Still, despite numerous rejections and delays, the crypto industry remains optimistic. BlackRock’s June 2023 application, followed by Grayscale’s August 2023 victory in court against the SEC, has reignited hopes, with Bloomberg analysts increasing the odds of a spot Bitcoin ETF approval to 75% by the end of the year.

Speaking to Decrypt in the wake of BlackRock’s filing, Bloomberg Senior ETF Analyst Eric Balchunas commented that BlackRock’s move “has definitely breathed new life into the whole Bitcoin ETF race and new optimism.” And Circle CEO Jeremy Allaire told Bloomberg towards the end of June 2023 that, Bitcoin ETFs “are more likely to be approved for general investor access,” after regulators’ past concerns had been addressed.

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