It’s been a long road for spot bitcoin ETF filers — and today the U.S. Securities and Exchange Commission finally approved all 11 standing applications from issuers.
“I’ve known for 10 years that this was going to happen,” Michael Sonnenshein, CEO of Grayscale Investments, said on TechCrunch’s Chain Reaction podcast. “We always knew the investor sentiment would get there, regulators would get there and the financial adviser community would get there.”
Grayscale, a digital asset investment firm that was one of the 11 firms to file for a bitcoin spot ETF, is best known for its Grayscale Bitcoin Trust (GBTC), which has now been converted, or “uplisted,” into its new bitcoin spot ETF product.
The 10 other issuers are BlackRock’s iShares Bitcoin Trust, ARK 21Shares Bitcoin ETF, Bitwise Bitcoin ETP Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Trust, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, Valkyrie Bitcoin Fund, Hashdex Bitcoin ETF and Franklin Bitcoin ETF.
Before now, the only crypto-focused ETFs in the U.S. were tied to futures contracts for bitcoin and Ethereum. Spot-focused crypto ETFs purport to allow investors and institutions alike to invest in crypto asset through a wrapper. When an investor buys shares in a spot-based ETF, they’re buying shares of the fund that owns that asset (e.g., BlackRock) instead of directly owning it, giving investors a regulated layer of protection.
While futures ETFs marked a big milestone in 2021, Sonnenshein believes the most critical one that brought these bitcoin spot ETF approvals was the D.C. Circuit Court of Appeals’ ruling in favor of Grayscale against the U.S. Securities and Exchange Commission in the case of a bitcoin spot ETF in the summer of 2023.
While that decision vacated the SEC’s previous denial order of “uplifting” GBTC into an ETF, Sonnenshein thinks “it was a moment not only of validation for us as an asset manager, but for the industry as a whole . . . that was really the catalyst that broke the logjam.”
Going into the bitcoin spot ETF approvals, there was a lot of pent-up demand, Sonnenshein said. “Many industry watchers and observers, particularly around the financial advisor market realized, even just here in the U.S. alone, there is about $30 trillion worth of advised wealth.”
Will that $30 trillion of wealth go straight into crypto? Realistically, absolutely not. But now, even if an investor — small or institutional — wants to have exposure, they can do so through a regulated vehicle.
“Over time, we’ll find that advisers will be appreciating more and more the benefits of including bitcoin in their clients’ portfolios as a diversification tool, increasing the total return strategies and building more efficient portfolios,” Sonnenshein said.
On the other side of the market, direct investors, institutions and other traditional investors would prefer an ETF wrapper compared to investing in the asset class directly. In the U.S., there’s over 100 ETFs that provide access to an array of assets, and bitcoin is now one of them.
“So it’s a moment of validation both for bitcoin as an asset as well as the ETF wrapper as an investment innovation,” Sonnenshein said.
Today, these ETFs highlight how some of the largest institutions and asset managers in the world are publicly getting involved in crypto. “It’s not just a moment of validation; it’s a starting point. This is, in my opinion, just the beginning,” Sonnenshein added. “This helps to normalize the asset class in many ways for many investors.”
This story was inspired by an episode of TechCrunch’s podcast Chain Reaction. Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to hear more stories and tips from the entrepreneurs building today’s most innovative companies.
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