The road to Bitcoin ETF is long. Despite the repeated rejections and delays of the BTC ETF, the crypto industry still seems to remain optimistic. Can the SEC finally approve it? Perhaps only time can give the answer.
Written by Stephen Graves, Liam J. Kelly, Tim Copeland
Translation: Lu Jiangfei
ETF is a publicly traded investment tool that can track the value of related assets; for BTC ETF, the asset is BTC. Supporters of the BTC ETF believe that relatively complex platforms, wallets, and private keys are a huge barrier for new users to enter the digital currency field, and the BTC ETF can allow investors to access relevant investment exposures while actually holding BTC.
BTC ETFs have begun to appear all over the world. Countries and regions such as Canada, Brazil, and Dubai have launched officially approved BTC ETFs, but so far, the US Securities and Exchange Commission does not seem to have much willingness to approve BTC ETF proposals. Since the first BTC ETF application in the United States was submitted in 2013, all applications have been rejected (or delayed response), but even so, in 2021, many institutional investors still submitted BTC ETF applications to the SEC.
Whether the digital currency market can obtain the “Holy Grail” of BTC ETF has also become a hot topic in the community. Below, let’s take a look at the BTC ETFs that have been “failed and fought repeatedly”.
VanEck
VanEck is one of the earliest BTC ETF applicants. As early as 2018, they cooperated with Solid to launch the VanEck SolidX Bitcoin Trust. Although the application was withdrawn in September 2019, VanEck then tried to launch the BTC ETF again and submitted an application to the US Securities and Exchange Commission for the VanEck Bitcoin Trust in December 2020. The trust stocks are intended to be traded on the Cboe BZX Exchange . It is worth noting that VanEck submitted this application just a few days after Jay Clayton, then chairman of the US Securities and Exchange Commission, resigned.
In an interview with CNBC in 2019, Jay Clayton expressed his disdain for the prospects of the BTC ETF and pointed out that although BTC ETF has made some “progress” on the issue of custody, the price is still vulnerable to manipulation, and the overseas trading platform ” It does not provide the same level of protection as the U.S. stock market.”
However, SEC coach Gary Gensler has not changed his regulatory stance after he took office. The US Securities and Exchange Commission has repeatedly postponed a decision on VanEck’s second BTC ETF application. The US Securities and Exchange Commission is currently trying to inform the public whether the digital currency market is vulnerable to manipulation. , And whether BTC has a high degree of transparency and other issues to solicit opinions.
Valkyrie Investments
Valkyrie Investments is a relatively new “BTC ETF” competitor. It submitted an application for a BTC ETF in January 2021. The ETF will be traded on the New York Stock Exchange Arca and will refer to the Chicago Mercantile Exchange’s Bitcoin reference price. It provides investors with an effective means to implement various investment strategies. The custodian of Valkyrie Investments’ BTC ETF chose Xapo, and BTC kept it in cold storage.
However, in the submitted application documents, Valkyrie Investments “defaulted” to the volatility of cryptocurrencies-and this is precisely one of the SEC’s main concerns. They wrote in their risk assessment: “The potential consequences of price fluctuations may affect Valkyrie. The value of Investments’ shares is adversely affected.”
NYDIG/Stone Ridge
The New York Digital Investment Group (NYDIG) and the consulting firm Stone Ridge are the second institutions to submit a BTC ETF application to the U.S. Securities and Exchange Commission (SEC) in 2021. The application was filed on February 16th, which coincided with the BTC price rising — -For the first time in history, it has reached 50,000 US dollars. Although the US Securities and Exchange Commission announced that it has postponed many other applications, it has not yet announced the review of NYDIG BTC ETF applications.
WisdomTree
WisdomTree, an asset management company headquartered in New York, actually already has experience in operating a BTC ETF, because the company launched a BTC ETF in 2019 and on the Swiss stock exchange SIX. In March 2021, the company submitted an S-1 application document to the US Securities and Exchange Commission, aiming to list the shares of its WisdomTree Bitcoin Trust on the Cboe bZx Exchange (trading symbol BTCW).
However, the SEC has repeatedly delayed the application and also invited the public to provide feedback on the proposal, including providing “written data, opinions and arguments on whether the proposal should be approved or disapproved.”
First Trust/SkyBridge
In March 2021, the hedge fund SkyBridge Capital submitted an application for the BTC ETF to the US Securities and Exchange Commission. The company is operated by former White House communications director Anthony Scaramucci and also owns a Bitcoin fund-but the fund is only open to qualified investors , The minimum investment is US$50,000, and the fund size has grown to more than US$370 million in just a few weeks after its launch in January 2021.
Anthony Scaramucci is very optimistic about the BTC ETF. He believes that regulatory approval can be obtained by the end of 2021: “I hope that with Gary Gensler now becoming the chairman of the SEC and being introduced into the regulatory field, we may have the BTC ETF in place before the end of this year.”
Wise Origin Bitcoin Trust
Fidelity’s Wise Origin Bitcoin Trust also filed a BTC ETF application with the U.S. Securities and Exchange Commission in March 2021-perhaps this is not surprising, because just a few weeks ago, Fidelity’s Director of Global Macroeconomics, Jurrien Timmer, It means that BTC has a “unique advantage” over gold. According to the application documents of Wise Origin Bitcoin Trust, Fidelity Service Company Inc will act as the fund manager and Fidelity Digital Assets will act as the custodian.
In May 2021, Cboe Global Markets also submitted a proposal to list Fidelity BTC ETF. CBOE believes that with the increase in investor participation and the sharp increase in the adoption of cryptocurrencies by institutions, the SEC’s concerns about market manipulation have become ” Sufficient relief.” In the same month, the US Securities and Exchange Commission began to review Fidelity’s application.
Kryptoin
Kryptoin, headquartered in Delaware, tried to apply for the BTC ETF for the first time in October 2019, hoping to list the Kryptoin Bitcoin ETF Trust on the New York Stock Exchange Arca. The financial services company then tried to apply for the second time in April 2021. BTC ETF, and plans to be listed on Cboe’s BZX Exchange. The revised application document also discloses its ETF service provider information, including Gemini, a cryptocurrency exchange that will provide BTC asset custody services.
At the end of April this year, the US Securities and Exchange Commission began to formally review the application, but then issued a decision on whether to approve the BTC ETF.
Galaxy Digital
In April 2021, the crypto investment company Galaxy Digital submitted a BTC ETF application, which is also the eighth Bitcoin exchange-traded fund application received by the SEC. The proposed Galaxy Bitcoin ETF is planned to be listed on the New York Stock Exchange Arca.
Currently, Galaxy Digital manages more than 400 million U.S. dollars in assets and is also one of the largest Bitcoin institutional holders. It holds 16,400 BTC in its reserve (valued at more than 680 million U.S. dollars at current prices).
Ark Invest
Ark Invest, an investment company led by Cathie Wood, filed the Ark21Shares ETF application with the SEC in June 2021. Prior to this, ARK Invest had cooperated with the Swiss-based ETF provider 21Shares AG to launch the ARK 21Shares Bitcoin ETF; if approved, the fund will It will be traded on Cboe’s BZX Exchange, the stock code is ARKB.
In addition, Ark Invest is also the first company to disclose ETF fees. According to the application documents, 21Shares plans to charge 0.95% of fees, which will be used to cover operating expenses.
Ark Invest is an investor in cryptocurrency exchange Coinbase, Grayscale Bitcoin Trust Fund, and payment processing service provider Square. It holds more than 8,000 BTC on its balance sheet. Cathie Wood herself is also an ardent supporter of Bitcoin. She believes that BTC represents “a brand new asset class” and can even become a reserve currency.
Global X
The most recent entry into the BTC ETF competition is Global X Digital Assets, a fund management company that manages $31 billion in assets. They filed an application with the US Securities and Exchange Commission in July 2021. If approved, the proposed Global X Bitcoin Trust will be listed on the Cboe BZX Exchange, with the fund manager being Bank of New York Mellon.
Global X’s investment portfolio includes 84 ETFs covering disruptive technologies, stock returns, commodities and emerging markets. As of now, its proposed trust fund has not disclosed its stock code or the identity of the custodian responsible for custody of its Bitcoin.
One River
One River Asset Management submitted an application for the BTC ETF to the SEC in May 2021, which is a carbon neutral bitcoin exchange-traded fund. As Bitcoin’s energy consumption and carbon footprint will be subject to more and more scrutiny, One River has pledged to use the environmental platform Moss Earth to “purchase and recover the carbon credits required for the carbon emissions associated with the trust holding Bitcoin.” , And use this to offset its carbon footprint.
Invesco Galaxy Bitcoin ETF
On September 22, 2021, Galaxy Digital and Invesco jointly submitted a BTC ETF application document. The BTC ETF was named Invesco Galaxy Bitcoin ETF. The ETF is directly “backed” by Bitcoin and is not related to derivatives such as futures. Invesco Capital Management LLC is the initiator of this BTC ETF application, but it is not clear which company will be responsible for the fund’s Bitcoin.
It is reported that Invesco Capital Management LLC is a wholly-owned subsidiary of Invesco. It is worth mentioning that the company is also the fourth largest ETF supplier in the United States, and this title is likely to be helpful in their application process. John Hoffman, head of ETF strategy at Invesco, said: “For those who have been engaged in ETF business for a long time, the current situation of BTC ETF is very similar to when ETF was first developed-it was in the late 1990s. In the early 2000s.”
Grayscale
The crypto investment fund Grayscale has not formally applied for a BTC ETF, but this American investment company has already operated a closed-end GBTC bitcoin trust fund and manages more than 650,000 BTC (valued at approximately $25 billion at today’s prices). In fact, Grayscale has announced that it will be “100% committed to converting GBTC to ETF.”
If GBTC is approved to be converted to ETF, Grayscale will be able to charge users lower management fees, and it will be easier to achieve capital in and out. Grayscale submitted an application to launch a BTC ETF in 2016, but chose to withdraw it a year later. At that time, they stated that “the reason for the withdrawal is that the digital asset regulatory environment has not yet developed to the extent that such products can be successfully introduced to the market.”
If the Grayscale BTC ETF is approved, investors will be allowed to redeem the shares at any time, which may prevent negative premiums and help keep the value of the shares and the underlying tokens matched. In July 2021, Grayscale and the Bank of New York Mellon reached an agreement that the global investment company will become a service provider for GBTC, which means that once GBTC is successfully converted to an ETF, BNY Mellon will provide it with transfer agency and ETF services.
A long and winding road
The road to BTC ETF is long.
As early as 2013, the Winklevoss brothers, the founders of the Gemini Exchange, applied to the SEC for a trust similar to the BTC ETF, but to this day, the regulator has not given any clear decision. In the past few years, the SEC has repeatedly postponed its decision on multiple BTC ETF applications, and companies like VanEck have chosen to withdraw their applications because they are worried that the SEC will reject them.
The main concern of the SEC is the lack of transparency of BTC transaction information, market manipulation, and the uniqueness of BTC. It is undeniable that BTC has completely different concepts from other assets frequently handled by the US Securities and Exchange Commission (for example, in the case of a hard fork, it will What’s the problem?). Not only that, the SEC is very worried about the lack of liquidity in the BTC market.
Sui Chung, CEO of CF Benchmarks, a crypto index provider, said: “I think the SEC’s previous concerns are more about consideration. Applicants do not have extensive experience in the ETF market, especially in the unpredictability of the cryptocurrency market and how to pass ETFs. The structure is synchronized with the stock market. If structured in the right way, the BTC ETF is not much different from any other ETF listed on the stock exchange.”
In August 2021, SEC Chairman Gary Gensler stated that the institution is more likely to approve Bitcoin futures ETF funds rather than spot ETF funds because futures ETF funds will invest in Bitcoin futures products regulated by the Chicago Mercantile Exchange (CME). Bitcoin spot is not regulated. At the end of September, Gary Gensler reiterated his support for Bitcoin futures ETF funds instead of Bitcoin spot ETF funds.
Despite the repeated rejections and delays of the BTC ETF, the crypto industry still seems to be optimistic. Can the SEC finally approve it? Perhaps only time can give the answer.
Source link: decrypt.co
