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The search for a bitcoin exchange-traded fund (ETF) has been a long journey, marked by ups and downs.
In fact, those excited about the possibility that the approval of a bitcoin spot ETF could take place as soon as January may be surprised to learn that the initial attempt at a bitcoin ETF dates back to July 2013.
That's when investors Cameron and Tyler Winklevoss, then best known for their controversial role in creating Facebook, first proposed the Winklevoss bitcoin Trust, a publicly traded vehicle that would open up bitcoin to institutional investors.
However, despite its forward-thinking proposal, the SEC officially rejected the proposal in March 2017, citing concerns about market surveillance and regulation. At that time, the price of bitcoin fell around 30 percent following the news, falling from a high ofbitcoin-etf-bid/”>around $1,400 to just over $900.
This rejection set the stage for a series of subsequent ETF rejections that have occurred since.
The first attempts
However, even before Winklevoss's rejection, the search for a bitcoin ETF continued and other entities submitted their own proposals.
In 2013, SolidX also submitted a proposal for its bitcoin fund shortly after the Winklevoss brothers. Despite subsequently partnering with fund manager VanEck, the proposal for VanEck SolidX bitcoin Trust was withdrawn in 2019.
At the same time, Barry Silbert's SecondMarket took a different path, launching a publicly traded trust that owns bitcoin, but whose shares are traded on over-the-counter (OTC) markets. Investors can purchase GBTC shares through traditional brokerage accounts, and the value of each share is intended to follow the price of bitcoin. However, GBTC may trade at a premium or discount to the actual net asset value (NAV) of the bitcoin you hold.
Back in July 2017, Grayscale filed to convert GBTC into an ETF. Despite becoming the largest and most popular bitcoin fund, GBTC remains unlisted on major US exchanges.
In recent years, amid turmoil at its parent company, discounts have reached 40%.
In September 2017, ProShares applied for two bitcoin ETFs, but in August 2018 it faced rejection along with seven other proposed bitcoin ETFs.
Direxion and GraniteShares applications for respective bitcoin ETFs were filed in December 2017, but were rejected in August 2018.
2019 until today
In the wake of the 2017 bull market, there were a number of other hopefuls attempting to launch a spot bitcoin ETF.
In January 2019, Bitwise proposed the Bitwise bitcoin ETF Trust, which was rejected by the SEC about nine months later. (He is among a pool of new applicants who will seek approval in January.)
At the same time, Wilshire Phoenix proposed a unique approach with the United States bitcoin and Treasury Investment Trust, hoping to combine bitcoin and US Treasury securities. However, the SEC rejected this proposal in February 2020.
In 2019, Realty Shares ETF Trusts proposed a bitcoin fund that invests in bitcoin futures contracts. The SEC forced the proposal to be withdrawn just two days later.
In 2020, WisdomTree filed to create a commodities fund and plans to invest up to 5% of its assets in bitcoin futures.
Since then, traders have relied on stocks like MicroStrategy and Block to gain exposure to bitcoin, and these companies, which offer bitcoin services, provide exposure to buyers.
Regulatory changes and resignations
The regulatory landscape underwent changes in December 2020 when SEC Chairman Jay Clayton resigned from the SEC, and initially there was optimism that change could come.
For example, in 2021, President Joe Biden nominated Gary Gensler, former chairman of the Commodity Futures Trading Commission, to replace Clayton. The appointment was notable as Gensler had given lectures on bitcoin during his tenure at MIT and even promoted several cryptocurrencies.
However, Gensler's policy responses to the industry have arguably been even more draconian.
During this transition period, VanEck resubmitted its application for a bitcoin ETF in December 2020, marking the first post-Clayton filing. The SEC acknowledged the filing on March 15, providing a 45-day review period.
In 2021, Valkyrie filed a new application for the Valkyrie bitcoin Fund to be listed on the New York Stock Exchange. NYDIG subsequently filed for approval of its bitcoin ETF in February 2021, coinciding with bitcoin price reaching $50,000 for the first time.
In March 2021, Fidelity filed for approval of the Wise Origin bitcoin Trust, adding another dimension to the ongoing search for a regulated bitcoin ETF.
Fast forward to the end of 2023 and there are 13 applications from players, including Fidelity and BlackRock. Most applicants met with the SEC and made amendments to their applications, increasing the prospects for approval.
Still, it remains anything but a safe bet. While Bloomberg analysts predict a 90% chance of approval, some fear that the SEC could find creative ways to further delay the debut of the bitcoin spot ETF.
If the fake news of the past is any indication, the markets bitcoin/comments/179ceto/why_did_cointelegraph_announce_fake_news/”>will probably react to the decisionand there could be volatility in the future.
