It was a long and uncertain journey for bitcoin spot ETF filers, but today marks a historic moment as the U.S. Securities and Exchange Commission has finally given approval to all 11 standing applications from issuers.
“I’ve known for 10 years that this was going to happen,” Michael Sonnenshein, CEO of Grayscale Investments, said on TechCrunch’s Chain Reaction podcast. “We always knew the investor sentiment would get there, regulators would get there and the financial advisor community would get there.”
Among the 11 firms to file for a bitcoin spot ETF was Grayscale, a digital asset investment firm best known for its Grayscale Bitcoin Trust (GBTC). With the SEC’s approval, the GBTC has now been converted, or “uplisted,” into its new bitcoin spot ETF product.
The other 10 issuers include BlackRock’s iShares Bitcoin Trust, ARK 21Shares Bitcoin ETF, Bitwise Bitcoin ETP Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Trust, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, Valkyrie Bitcoin Fund, Hashdex Bitcoin ETF, and Franklin Bitcoin ETF.
Until now, the only crypto-focused ETFs in the U.S. were tied to futures contracts for bitcoin and ethereum. However, spot-focused crypto ETFs allow both investors and institutions to invest in crypto assets through a regulated wrapper. When investing in a spot-based ETF, shares are purchased in the fund that owns the asset instead of owning it directly, providing a layer of protection.
While the approval of futures ETFs in 2021 was a major milestone, Sonnenshein believes the critical turning point for these bitcoin spot ETF approvals was the D.C. Circuit Court of Appeals’ ruling in favor of Grayscale against the SEC in the case of a bitcoin spot ETF in the summer of 2023.
While that decision vacated the SEC’s previous denial order of “uplifting” GBTC into an ETF, Sonnenshein believes “it was a moment not only of validation for us as an asset manager, but for the industry as a whole…that was really the catalyst that broke the logjam.”
Prior to the approval of bitcoin spot ETFs, there was a significant amount of demand waiting to be fulfilled, according to Sonnenshein. “Many industry watchers and observers, particularly in the financial advisor market, realized that in the U.S. alone, there is about $30 trillion worth of advised wealth,” he added.