As the U.S. Securities and Exchange Commission (SEC) nears its decision on the approval of spot bitcoin exchange-traded funds (ETFs), asset managers, including industry giants like BlackRock, Ark Investments, and 21Shares, are on high alert, according to Reuters.
Financial Titans Unshaken By Bitcoin ETF False Report
As Bitcoinist reported yesterday, the US Securities and Exchange Commission (SEC) approved 11 Bitcoin ETF applications. In a separate post, the SEC Chair, Gary Gensler, denied the announcement, attributing it to security failures with the regulator’s X account.
This announcement triggered a spike in market volatility, pushing the Bitcoin spot price to around $48,000. The cryptocurrency then dropped to the support zone of around $45,000 as the SEC rushed to clarify the misunderstanding.
Despite this, Reuters claimed, several industry executives, preferring anonymity, expressed confidence in approving the Ark/21Shares product and other similar ETFs, such as the one from BlackRock and VanEck.
These financial managers have been fighting to get the upper hand when the SEC approves the Bitcoin ETF applications. In that sense, BlackRock and the company have been adjusting their management fees, lowering them to attract the most capital.
As of this writing, BlackRock adjusted its fees from 0.30% to 0.25% in the first year following the product’s launch. Ark adjusted its fees to around 0.20% to compete with BlackRock in the so-called “Fee Wars.”
BITCOIN ETF FEE WARS
Invesco / Galaxy – 0 then 59 bps
Blackrock – 20 bps then 30 bps
Bitwise – 0 then 24 bps
Ark – 0 then 25 bps
Fidelity – 39 bps
Valkyrie – 80 bps
Grayscale – 150 bps
have any others published yet?
— Meltem Demirors (@Melt_Dem) January 8, 2024
The SEC is expected to bring clarity on the spot Bitcoin ETF today. The approval would represent a significant shift in the institutionalization of Bitcoin, as several experts have pointed out, potentially drawing substantial investment into the sector.
Standard Chartered analysts predict these ETFs could attract between $50 billion to $100 billion in 2023 alone, potentially pushing Bitcoin prices to unprecedented highs. The journey to ETF approval hasn’t been without its challenges.
The SEC has hesitated to endorse Bitcoin ETFs for over a decade due to concerns over alleged “market manipulation.” However, a recent federal court ruling on the Grayscale Bitcoin Trust (GBTC) and issuers’ efforts to address these concerns have reignited hopes for approval. If approved, Grayscale will launch their spot BTC ETF with the highest fees at 1.5%.
Washinton Demands Answers
As a result of yesterday’s hack, representatives from the US Senate issued letters demanding an investigation and an explanation from the regulator. Bill Hagerty from the Appropriations and Foreign Relations Committees stated:
Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable.
When the SEC finally approves the BTC spot, ETFs could cement Bitcoin’s status as a legitimate asset class, attracting more investors and potentially reshaping the financial landscape. However, the SEC’s stance on cryptocurrency regulation remains critical in this evolving narrative, and a window of uncertainty, while small, remains.
Cover image by Unsplash, chart from Tradingview