SEC approves 11 spot bitcoin ETFs, with trading likely set to start tomorrow

The Securities and Exchange Commission said it has approved proposals for 11 spot bitcoin ETFs on an accelerated basis, in a document that was uploaded to the SEC website.

The document lists 11 spot bitcoin ETFs by Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity and Franklin.

"After careful review, the Commission finds that the Proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange," the document states.

The document notes that fraud or manipulation that would impact prices in spot bitcoin markets would likely impact bitcoin futures prices in similar ways. This is a nod to the recent court case that found the SEC acted in an "arbitrary and capricious" manner when rejecting Grayscale's earlier bid to pivot GBTC to an ETF.

“I am happy to confirm that the Grayscale team has received necessary regulatory approvals to uplist GBTC to NYSE Arca, and we will share a press release with additional information shortly,” said a Grayscale spokesperson.

After the document was first picked up, it quickly went to a 404 error. A short while later it appeared in the correct part of the SEC website and the SEC told The Block that the filing was accurate.

Alongside the omnibus approval order, the SEC published a speech by Chair Gary Gensler. He confirmed the approvals but added a warning. "While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto," he said.

While the document approves the issuers' 19b-4 forms all in one go, they will still need their S-1 forms to be effective for trading to start.

Earlier today, the Cboe BZX exchange sent letters to the Securities and Exchange Commission on Wednesday, requesting “acceleration of registration” for proposed spot bitcoin ETFs. A few hours later, it issued listing notifications for six prospective ETFs saying that trading would begin on Thursday. This was prior to any approvals by the SEC.

Potential inflows

Once trading gets underway, these products could see large inflows. Valkyrie Investments co-founder and CIO Steven McClurg said he expects $200 million to $400 million of investors’ funds coming to Valkyrie’s ETF, and all participants might see $4 to $5 billion of inflows over the first couple of weeks.

VanEck estimated that $1 billion of funds would arrive in the first few days, and $2.4 billion within a quarter. Galaxy expects $14 billion within the first year. Bitwise said it anticipated the market for spot bitcoin ETFs to reach around $72 billion within five years. 

On Tuesday, the SEC’s X account was compromised and a post went out claiming the SEC had granted approval for listing bitcoin ETFs on all registered securities exchanges with an image showing a quote by SEC Chair Gary Gensler. It was shortly deleted with follow up posts claiming it was unauthorized and that spot bitcoin ETFs had not been approved by that point.

Preparing for spot bitcoin ETFs

The issuers have also lined up seed funding for their products. VanEck has taken the lead with direct investment, noting that it has seeded its potential spot bitcoin ETF with $72.5 million. Bitwise has seeded its proposed ETF with $500,000, according to its amended S-1 form, but Pantera Capital has also said that it is interested in putting $200 million into the fund if approved. BlackRock has seeded its potential spot bitcoin ETF with $10 million.

Prior to approval, the ETF applicants had been waging a war for who can offer the lowest fees. Bitwise went the lowest, with zero fees for the first six months or until $1 billion of assets, and 0.2% afterward — which it lowered from 0.24% just days before. BlackRock maintained its offering of a discounted 0.2% for the first 12 months or until the fund hits $5 billion in assets, and 0.3% from then on. Other fees range up to 1.5% at the highest.

Update: This article has been updated with additional information. The headline was amended for clarity.