What To Know About the Spot Bitcoin ETF Opportunity
In this Q&A, we dive into the most pressing questions surrounding the path to a spot bitcoin ETF approval, its potential impacts on crypto, and common misconceptions about the application process.
Why does a spot bitcoin ETF matter, really?
There are three compelling reasons. First, an approval would make it vastly easier for investment professionals—and particularly financial advisors—to gain exposure to bitcoin; ETFs are among the most popular and efficient vehicles to access key markets or investment themes. Second, ETFs are uniquely structured to offer better price efficiencies than other products. Third, and arguably most important, a spot bitcoin ETF would likely be seen by many as a regulatory stamp of approval; it would communicate that the market has matured and is now ready for institutional investors to enter with confidence.
How likely is the SEC to approve a spot bitcoin ETF?
While there is no guarantee the SEC will approve any of the applications, here at Bitwise we’re optimistic. We would not have filed an application if we’d had doubts about the market’s readiness.
What makes this round of applications different?
The maturation of the crypto market. Since the first spot bitcoin ETF filing in 2013, there’s been significant growth and improvement across custody, liquidity, and trading volume related to bitcoin. Especially noteworthy is the successful trading of bitcoin futures on the regulated CME bitcoin futures market—and the nearly two-year track record of ETFs based on these futures.
Also, you can’t overlook the fact that BlackRock joined the fray by filing its own application for a spot bitcoin ETF on June 15. Seeing the world’s largest asset manager, with $9 trillion under management, place its weight and reputation behind bitcoin is arguably the highest-profile endorsement of bitcoin in crypto history.
How will the SEC determine who can offer a spot bitcoin ETF first?
Any outcome is possible. The SEC could approve all the applications at once, choose a handful of them, or pick just one. It’s impossible to predict.
What is the most common misconception about the approval process?
In the media, there’s been a mischaracterization of interim 45-day deadlines as definitive or hard deadlines. Some quick background: Once bitcoin ETF applications are filed with the SEC, the next step is for them to be entered into the Federal Register, the official journal of the U.S. government. The law gives the SEC a fixed period of time to review these applications. The media, however, often focuses on the interim deadlines—checkpoints at 45 days, 90 days, etc.—where the SEC must issue some response. But those “deadlines” are merely suggestions. The SEC can—and often does—choose to extend the timeline for any review up to a 240-day limit. So if you see a media report about an upcoming decision date, check to see if it’s an interim deadline or the final deadline. The first final deadline for the review of this batch of spot bitcoin ETF applications is in January 2024.
What kind of impact is a spot bitcoin ETF likely to have on crypto?
At Bitwise, we believe an approval would signal the transformation of crypto from a niche, experimental technology to a major asset class ready for institutional adoption. We believe this shift—which we call the "Mainstream Era of Crypto"—is already well underway, with the crypto market having entered a new multi-year bull run. But a spot bitcoin ETF approval would significantly accelerate this transformation and bring crypto technology and applications deeper into the everyday life of consumers and investors alike.