The Quest for a US Bitcoin Spot ETF: Resilience Amid SEC Rejections and Renewed Hope

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Since 2013, the elusive spot Bitcoin ETF has been sought after by the crypto community. An ETF is a publicly-traded investment vehicle that tracks the value of an underlying asset; in this case, Bitcoin. Interest in Bitcoin ETFs has grown globally, with Canada, Brazil, and Dubai embracing them, and ProShares’ Bitcoin futures ETF launching on the New York Stock Exchange in October 2021. However, the U.S. Securities and Exchange Commission (SEC) has consistently rejected applications for spot Bitcoin ETFs, citing concerns over market manipulation among cryptocurrency traders.

On June 15, BlackRock surprised the traditional finance world by filing an application for a Bitcoin spot ETF, proposing Coinbase as the crypto custodian and spot market data provider, with BNY Mellon as cash custodian. This filing sparked renewed optimism and led other companies, like WisdomTree, Invesco, and Valkyrie to submit fresh applications to the SEC.

The New York-based asset manager WisdomTree, which already operates a Bitcoin ETF on Switzerland’s SIX stock exchange since 2019, filed an S-1 with the SEC in March 2021. The SEC has delayed its decision on WisdomTree’s application multiple times, rejecting it in late 2021, before receiving another application from WisdomTree in mid-2023.

Invesco Capital Management LLC and Galaxy Digital filed a joint application for a physically-backed Invesco Galaxy Bitcoin ETF. The sponsor, a wholly-owned subsidiary of Invesco Ltd., is the fourth-largest ETF provider in the United States. Invesco and Galaxy submitted a new application to the SEC in mid-2023, following BlackRock’s example.

Valkyrie Investments joined the Bitcoin ETF race in January 2021, proposing a fund that would refer to the Chicago Mercantile Exchange’s reference price for Bitcoin and trade on NYSE Arca. The SEC delayed and ultimately rejected Valkyrie’s application alongside Kryptoin’s around the end of 2021. Still, Valkyrie managed to get a Bitcoin Mining ETF approved by the SEC in early 2022. It submitted another Bitcoin spot ETF application to the SEC in June 2022.

Ark Invest, led by Cathie Wood, filed its application for the Ark21Shares ETF in June 2021, partnering with Swiss-based ETF provider 21Shares AG. Though rejected by the SEC in early 2022 and January 2023, Ark Invest ran for its third attempt.

Over the years, the SEC has rejected numerous Bitcoin ETF applications, including those of Global X, Kryptoin, Fidelity/Wise Origin, First Trust/SkyBridge, NYDIG/Stone Ridge, One River, Galaxy Digital, Grayscale, and VanEck.

Despite numerous rejections and delays, the crypto industry remains optimistic, and BlackRock’s recent application has not only renewed hope but spurred other companies to apply for Bitcoin spot ETFs. The widespread interest in these investment vehicles suggests that the market remains resilient, and the possibility of a U.S. Bitcoin ETF remains on the horizon.

Source: Decrypt

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