In June 2023, a new round of Bitcoin spot ETF applications led by BlackRock made the price of Bitcoin at It rose 20% in one week, from $25,000 to $30,000. Yesterday's news that Grayscale won the lawsuit caused the recently depressed Bitcoin price to rebound by 5% in 24 hours, from 26,000 to a maximum of $28,000. The market’s confidence in the successful approval of the Bitcoin spot ETF has once again been ignited.
Now, let us take a closer look at the current application status of Bitcoin spot ETFs and the important time points when they may be approved.
In June 2023, asset management giant BlackRock submitted an application for iShares Bitcoin Trust, starting a new round Bitcoin spot ETF application competition. Spurred by BlackRock, many investment/asset management institutions joined the competition. As of August 2023, eight institutions, including BlackRock, have applied to the SEC for Bitcoin spot ETFs.
According to the Bitcoin Spot ETF application process announced by the SEC, in the SEC’s Federal Register After 19b-4 is issued, the calculation of the ETF's resolution time will begin.
The SEC’s decision-making time for Bitcoin spot ETF applications totals 240 days. There will be 3 public replies in between. The intervals between reply dates are 45 days, 45 days, 90 days, and 60 days respectively. That is to say, the SEC can have three opportunities to delay the outcome of the ETF application before the SEC issues a final decision (approval or rejection). At the same time, the SEC has the power to approve or reject the application at any time during the resolution process.
The specific application process for Bitcoin spot ETF is as follows:
Taking BlackRock as an example, the SEC published the 19b-4 rule change document for iShares Bitcoin Trust in the Federal Register on July 19. Therefore, pushing back 45 days from July 19 is the first reply deadline for iShares Bitcoin Trust, which is September 2. If the SEC decides to postpone the resolution before this deadline, the next response will be postponed to 45 days later. And 240 days later, March 15, 2024, is the final reply date from iShares Bitcoin Trust.
Below, we list the specific application information of these 8 institutions, including the application project name, listing exchange, sponsor, trustee, custodian, application-related time, and historical application status.
Application project: iShares Bitcoin Trust
Exchange: Nasdaq
Sponsor: BlackRock Fund Advisors
Trustee: Delaware statutory trust
Bitcoin custodian: Coinbase Custody Trust Company, LLC
Cash custodian: Bank of New York Mellon
Among them, Bitcoin custodians and cash custodians are collectively referred to as custodians.
Relevant filing dates:
Historical application status: None
Application project: Wise Origin Bitcoin Trust
Exchange: Cboe BZX
Sponsor: FD Funds Management LLC
Trustee: Delaware Trust Company
Manager: Fidelity Service Company, Inc. (FSC)
Transfer Assistant: Third-party institution (no clear information yet)
Marketing agent: Fidelity Distributors Corporation
Bitcoin custodian: Fidelity Digital Assets Services, LLC (FDAS)
Application related time:
Historical application status:
Fidelity submitted a spot ETF application in May 2021 and was rejected in February 2022.
Application project: ARK 21Shares Bitcoin ETF
Exchange: Cboe BZX
Sponsor: 21Shares US LLC
Trustee: Delaware Trust Company
Cash Custodian (Transfer Agent): Bank of New York Mellon
Administrator: Bank of New York Mellon
Market Agent: Foreside Global Services, LLC
Custodian: Coinbase Custody Trust Company, LLC
Market Assistant: ARK Investment Management LLC
Application related time:
Reason for rejection: The committee believed that more time was needed to consider the issues involved in the rule changes, so it decided to postpone the resolution.
On June 30, the exchange submitted Amendment No. 2; on July 11, it submitted Amendment No. 3
On August 11, the SEC issued a document soliciting opinions on Amendment 3, and the resolution time was postponed again
Historical application status:
Ark Invest had previously submitted two spot ETF applications, in 2021 and 2022, both of which were rejected.
Application project: Invesco Galaxy Bitcoin ETF
The Galaxy in the name comes from the fact that the ETF tracks the Bloomberg Galaxy Bitcoin Index
Exchange: Cboe BZX
Sponsor: Invesco Capital Management LLC
Trustee: Delaware Trust Company
Custodian: U.S. No. Third-party trust company and qualified custodian (no clear information yet)
Manager: Mature global fund manager (no clear information yet)
Transfer agent: third-party institution (no clear information yet)
Relevant time for application:
Historical application status:
Invesco jointly submitted a spot ETF application with Galaxy in September 2021, and withdrew the application in the same year.
Application project: WisdomTree Bitcoin Trust
Exchange: Cboe BZX
Sponsor: WisdomTree Digital Commodity Services, LLC
Trustee: Delaware Trust Company
Admin/Transfer Agent: U.S. Bank Global Fund Services
Custodian: U.S. Bank, National Association
Relevant time of application:
Historical application status:
WisdomTree had previously submitted two spot ETF applications, in March 2021 and January 2022, both of which were rejected.
Application project: VanEck Bitcoin Trust
Exchange: Cboe BZX
Sponsor: VanEck Digital Assets, LLC
p>Trustee: Delaware Trust Company
Admin/Transfer Agent: The State Street Bank and Trust Company
Marketing Assistant: Van Eck Securities Corporation
Bitcoin custodian: third-party qualified custodian (no clear information yet)
Relevant filing dates:
Historical application status:
VanEck first submitted an application for a Bitcoin spot ETF in June 2018 and withdrew its application in September 2019. Then, VanEck submitted applications for spot ETFs in March 2021 and June 2022, respectively, but both applications were rejected.
Application project: Bitwise Bitcoin ETP Trust
Exchange: NYSE Arca
Sponsor: Bitwise Investment Advisers, LLC
Trustee: Delaware Trust Company
Cash custodian (transfer agent): third-party service provider (no clear information yet)
Bitcoin custodian: Third-party custodian (no clear information yet)
Relevant time of application:
Historical application status:
Bitwise submitted a spot ETF application in October 2021 and was rejected in June 2022.
Application project: Valkyrie Bitcoin Fund
Exchange: Nasdaq
Sponsor: Valkyrie Digital Assets, LLC
Trustee: Delaware Trust Company
Bitcoin Custodian: Third-party qualified custodian (no clear information yet)
Manager/Transfer Agent: U.S. Bank Global Fund Services
Relevant filing dates:
Historical application status:
Valkyrie submitted a spot ETF application in April 2021 and was rejected in December 2021.
All the above information comes from the SEC Federal Register.
The application for this round of Bitcoin spot ETF has a high probability of being successfully approved. The main reasons are the extremely high success rate of BlackRock ETF applications and the addition of the Monitoring Sharing Agreement SSA.
BlackRock is famous for issuing index-tracking fund products. Its flagship fund product (iShares) accounts for nearly 50% of the U.S. ETF market. BlackRock has a long history of success in obtaining ETF approvals. According to statistics, the success rate of its ETF applications is nearly 100%, with the number of approvals being 575/576. The only failure was an actively managed ETF filed by BlackRock and Precidian Investments, which the SEC cited as a lack of transparency in earnings as the reason for rejection.
This time, the ETF application documents of 8 institutions have added the monitoring mentioned in the reasons for the rejection of the Bitcoin spot ETF many times earlier. Sharing Agreement (SSA).
SSA, full name Surveillance-Sharing Agreement, is an agreement between cryptocurrency exchanges and market regulators. The agreement allows both parties to share transaction data and information to monitor transactions. If suspicious trading data or information appears, this information will be pushed to regulators, ETF issuers and exchanges at the same time. SSA is often used in situations involving financial products such as ETFs. It can increase the effectiveness of financial market surveillance and help regulators detect market manipulation, fraud and other inappropriate trading practices.
The inclusion of SSA in this round of application documents will have a high probability of making the SEC less relaxed in preventing fraud and manipulative transactions. At least this time the SEC cannot give the same reasons for rejection as in 2021.
Judging from the application dates, these eight institutions, except Ark Invest, all chose to apply to the SEC at almost the same time. It’s hard not to wonder if they’ve gotten some word that the SEC might approve the issuance of a Bitcoin spot ETF this year. Of course, we cannot verify whether such news actually exists. But the attitude conveyed is undoubtedly positive.
At the same time, because the dates of responses are all very close, it is likely that multiple ETFs will be approved or delayed at the same time. The proposed rule change documents for these ETFs are quite similar and include surveillance sharing agreements (SSAs). So there is no reason why the SEC would reject one and approve the other. In other words, if BlackRock’s Bitcoin spot ETF is approved, there is a high probability that ETF applications submitted by other institutions will be approved together.
Judging from the previous approval status of Bitcoin spot ETFs, the probability that this ETF will be successfully approved within the first and second response time is very slim. The SEC will basically choose to delay the application for a Bitcoin spot ETF for 240 days before making a decision to reject it. Although the SEC cannot use the same reason to reject the spot ETF application this time, due to its consistent attitude towards the crypto market, it is likely to search for other reasons to delay the application response. Finally put off making a decision until closer to the final reply date.
On the other hand, the selection of Bitcoin custodians in ETFs may also be a key point affecting the SEC’s resolution. For a Bitcoin spot ETF, the Bitcoin custodian needs to have sufficient influence and experience in the crypto field, and must also be recognized by the SEC (can become a trading supervisor to supervise trading). For example, BlackRock made it clear in its ETF application documents that it would use Coinbase as a Bitcoin custodian. Coinbase’s previous litigation with the SEC may affect the final decision on the application to a certain extent. While the lawsuit has nothing to do with Bitcoin per se, it could delay the filing.
Therefore, we predict that the most likely time for successful approval of this round of Bitcoin spot ETFs will occur 240 days after the publication of the Federal Register 19b-4 notice, which is the final response date.
According to the publication time of the rule change document for each ETF application in the Federal Register, the possible approval times for the 8 institutional ETFs are as follows: