Spot Bitcoin ETF Applications

Bitcoin has been trying to pass the $45,000 mark for two years, and it’s finally succeeded. The world’s biggest cryptocurrency kicked off the New Year impressively, anchored in optimism regarding the possible approval of ETF investing. Most investors expect some sort of decision by the first half of the month, which signals keen interest in the digital asset industry. The upcoming buying pressure and the curtailed supply after the halving occurs create the perfect conditions for a bullish 2024. It’s expected that the U.S. Securities and Exchange Commission will approve multiple applications for a spot Bitcoin ETF if not all of the applications in front of them. 

The SEC apparently still has a lot of paperwork to review, so it’s not clear whether approvals will be announced late this week or early next week. Discussions between the securities regulator and asset managers yearning to launch Bitcoin ETFs have progressed to technical details, which has led some experts to believe that approval could be impending. Grayscale Investments, for instance, has neglected to include key information that the SEC wants included in the filing, namely the details of the authorized participants allowed to create and redeem shares. The federal administrative agency will caution issuers with a spot Bitcoin ETF application the moment they’ve been cleared to launch. 

For Investors, A Spot Bitcoin ETF Would Be the Best Product on The Market 

According to Cointelegraph, seven companies are looking forward to launching spot Bitcoin ETF products. In this respect, they’ve filed the latest versions of Form S-1 to be listed on the national exchange; investors look to the information that companies supply in the SEC Form S-1 to make a decision about whether or not they want to invest. WisdomTree, Fidelity, and Invesco Galaxy have listed their authorized participants in the new filings. An ETF is an affordable, tax-efficient way to access various asset classes, including cryptocurrency. The approval of a spot Bitcoin ETF isn’t a matter of if but rather when. 

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The complexities of exchanges, cryptocurrency wallets, and private keys represent entry barriers for investors. Whereas countless people talk about Bitcoin, they don’t understand it. To be more precise, they don’t know how to set up a wallet, what wrapped tokens are, or how to use a centralized/decentralized exchange, so they’re highly unlikely to go in with all their investments. A spot Bitcoin ETF would make it possible for investors to gain exposure to the digital asset without having to hold their own cryptocurrency. As opposed to a futures ETF, a spot Bitcoin ETF invests directly in Bitcoin, not derivative contracts based on its price. 

Spot Bitcoin ETFs Differ from Other Bitcoin ETFs  

Spot Bitcoin ETFs and other Bitcoin ETFs are poles apart in how they’re structured and how much exposure they offer in terms of cryptocurrency price changes. A spot Bitcoin ETF is a regulated product released by a licensed issuer providing direct ownership of Bitcoin. There are restrictions when it comes to trading hours, and fees must be paid for the management of the fund (custodial costs, management salaries, and the cost of buying and selling cryptocurrency). The launch of the United States’ first spot Bitcoin ETF will be a milestone for investors, not to mention the Bitcoin community. Not only will it provide people with clarity, but it will also open the doors for superannuation funds.

Up To the Present Time, The SEC Has Rejected Every Application for A Spot Bitcoin ETF  

Spot Bitcoin ETFs have been incorporated in several countries around the world, including but not limited to Germany, Canada, Australia, Brazil, Switzerland, and Jersey. The SEC hasn’t yet approved a spot Bitcoin ETF, rejecting almost every application submitted on the basis of the potential for market manipulation among cryptocurrency traders. Put simply, the securities regulator is concerned that a spot Bitcoin ETF would expose investors to unnecessary risk. In August 2023, the SEC affirmed it needed a longer period to review applications. In September, the decision was delayed once again. In December, Gary Gensler, serving as the chair of the SEC, substantiated the claim that the regulator is taking a new look at applications for a spot Bitcoin ETF. 

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The deadline for a spot Bitcoin ETF decision is looming and it’s expected multiple applications will be approved by this time. Bitcoin has started 2024 with a rally, rising above $45,000 for the first time since April 2022, but it’s possible that the price will drop should investors want to sell to collect profits. With the New Year’s holiday and time off for officials, spot Bitcoin ETF approvals in the following days might face even greater challenges. It’s necessary for the securities regulator to examine all the modifications made to the Form S-1 and make comments on them. 

Some analysts have tried to predict on which days in January the cryptocurrency industry will be contacted by the SEC, although it’s a futile effort. Indeed, a spot Bitcoin ETF would make the cryptocurrency more accessible to the population, yet the experts advise investors to take into account their risk tolerance and goals before becoming involved. There’s no high minimum investment, which means that ETF shares can be acquired in single-share quantities, but transaction fees and the ETF’s expense ratio can have a sudden and powerful impact on smaller investments. If you work with larger time horizons and have a high level of risk tolerance, a spot Bitcoin ETF could be a strategic fit. 

Final Remarks 

Until now, the SEC has delayed making a decision regarding pot Bitcoin ETF applications as it’s overwhelmed with paperwork. It’s imperative to establish a regulatory stance on cryptocurrency because there’s great potential for digital assets to be used for practical purposes. The securities regulator should inform spot Bitcoin ETF issuers by January 10 if their applications are approved, the SEC’s resolution setting the stage for broader regulatory discussions. Many asset management firms have yet to disclose their planned rates, for the sake of clarification. The approval of the first spot Bitcoin ETF could encourage institutional adoption and foster greater adoption of Bitcoin.