The Securities and Exchange Commission (SEC) is showing signs of expediting approvals for multiple spot Bitcoin exchange-traded funds (ETFs). This anticipation builds upon the SEC’s lack of action in appealing a court case it lost to Grayscale Investments. According to analysts at JPMorgan, the regulatory body will most likely finalize these approvals within months, potentially ahead of January 10, 2024. This date marks the final deadline for applications from Ark Invest and 21Shares, among others.
Pressures mount on Grayscale
Moreover, with the looming approval of a spot Bitcoin ETF for Grayscale’s GBTC fund, the asset manager may have to reconsider its fee structure. Grayscale’s Bitcoin Trust, boasting $17.7 billion in assets under management, will likely need to lower its fees. Such a move would be in line with the new share redemption and creation arbitrage mechanism that ETFs naturally bring. Analysts predict a beneficial impact of about $2 billion for investors as the fund transitions into an ETF, effectively eradicating the discount to its net asset value (NAV).
No first-mover advantage in sight
Additionally, JPMorgan experts indicate that the SEC will not give any spot Bitcoin ETF the privilege of being the first to market. Hence, multiple approvals are expected to happen simultaneously. This will ultimately benefit investors by introducing more competition, particularly in the domain of ETF fees.
However, despite the heightened anticipation and growing optimism, JPMorgan analysts caution that the approvals will likely not revolutionize the crypto markets. Spot Bitcoin ETFs have been available in Canada and Europe but haven’t garnered much attention from investors.
Significantly, this batch of approvals would introduce competition, which could further lower fees and benefit investors. The analysts highlight that competition among different ETFs would be particularly beneficial in terms of fees, offering more choices to potential investors.
Consequently, while the crypto community eagerly awaits the SEC’s decisions, the impact on the broader market may be tempered. The potential approval of multiple spot Bitcoin ETFs adds a new layer to the evolving regulatory environment around cryptocurrencies, but it isn’t poised to shake the foundations of the industry. The true measure of success will be gauged by investor interest post-approval, a factor that remains an open-ended variable at this stage.