Investors who want to bet on Bitcoin may soon have more options to choose from if US regulators soften their opposition to exchange-traded funds tied directly to Bitcoin holdings. Major financial firms including BlackRockFidelityInvesco have submitted applications to sell US “spot” Bitcoin ETFs that would be physically backed by actual Bitcoin. In the past, the US Securities and Exchange Commission has routinely rejected these products, citing wariness over volatility and potential manipulation. Investors took the BlackRock filing, in particular, as a sign that the SEC was close to dropping its longtime opposition to such financial projects. Bitcoin prices hit a one-year high in the days after BlackRock’s application.
ETFs, a $7 trillion industry, are part of a broader family of products known as exchange-traded products, though people frequently use “ETFs” to refer to all of them since they are by far the largest and most popular category. Crypto-native firms and major Wall Street financial institutions alike are trying to launch a kind of ETF that actually holds Bitcoin, as opposed to the products that invest in Bitcoin futures. The SEC hasn’t approved any applications for these so-called spot Bitcoin ETFs, whereas multiple futures-backed crypto funds already exist in the market. Futures-backed Bitcoin ETFs have been available to US customers since 2021. Issuers and investors are advocating for spot Bitcoin ETFs to be similarly accessible to retail and institutional investors in the US, a development that’s perceived as having the potential to greatly broaden participation in the cryptocurrency industry.
