Which TradFi giant could jump into the bitcoin ETF race next?

So, who’s next?

Nate Geraci, pres­i­dent of The ETF Store, said in an X post in June that Schwab Asset Man­age­ment was a “dark horse” can­di­date to pur­sue a spot bit­coin ETF. 

David Bot­set, head of equi­ty prod­uct man­age­ment and inno­va­tion at Schwab Asset Man­age­ment, told Block­works in Jan­u­ary 2022 that the com­pa­ny was eval­u­at­ing “oppor­tu­ni­ties such as spot cryp­tocur­ren­cy or blockchain tech­nolo­gies in the form of an ETF.”

The firm launched the Schwab Cryp­to The­mat­ic ETF (STCE) last year. Invest­ing in cryp­to-relat­ed stocks such as Coin­base, MicroS­trat­e­gy and var­i­ous bit­coin min­ers, the fund has about $11 mil­lion in assets. Schwab was also among the back­ers of cryp­to exchange EDX Mar­kets, which launched in June.

A com­pa­ny spokesper­son declined to com­ment on whether it could pur­sue a spot bit­coin ETF.

State Street Glob­al Advi­sors (SSGA) is anoth­er can­di­date for enter­ing the spot bit­coin ETF race, accord­ing to CK Zheng, co-founder of cryp­to hedge fund ZX Squared Cap­i­tal. The firm’s US ETFs hold near­ly $1.1 tril­lion — the sec­ond-largest of which is its SPDR Gold Trust (GLD), which man­ages $54 billion. 

“As we view BTC as a com­mod­i­ty and a dig­i­tal gold, State Street is in a unique posi­tion to expand their SPDR GLD ETF to a SPDR BTC ETF with their exper­tise and influ­ence,” Zheng told Blockworks. 

Bloomberg Intel­li­gence senior ana­lyst Eric Balchu­nas agrees, not­ing in a response to Geraci’s June post: “How on Earth do you be the [com­pa­ny with] GLD and not look to add spot bit­coin asap?”

“We con­tin­u­ous­ly eval­u­ate our prod­uct line­up and pric­ing struc­ture in order to offer investors attrac­tive solu­tions to help them meet their goals,” a State Street spokesper­son told Block­works in an email Mon­day, declin­ing to com­ment further. 

State Street for­mal­ly launched a dig­i­tal finance divi­sion in 2021 — a unit whose pri­or­i­ties this year were set to include tok­eniz­ing funds and pri­vate assets. 

But Rory Tobin, head of SSGA’s ETF busi­ness, told Finan­cial News in June the firm didn’t have imme­di­ate plans to launch cryp­to prod­ucts — not­ing “it’s been hard to come up with an invest­ment case for crypto.”

ProShares runs the largest bit­coin-relat­ed ETF in the US — albeit one that holds bit­coin futures instead of BTC direct­ly. Rough­ly $900 mil­lion of its $65 bil­lion in US ETF assets under man­age­ment reside in its Bit­coin Strat­e­gy ETF (BITO). 

The firm has not yet applied with the US Secu­ri­ties and Exchange Com­mis­sion for a spot prod­uct. A spokesper­son declined to comment. 

“If they can bring this suc­cess to a spot BTC ETF, they will become a dom­i­nant play­er in this space,” Zheng said. 

Remaining on the sidelines

Matthew Sigel, head of dig­i­tal assets research at prospec­tive bit­coin ETF issuer VanEck, said jump­ing into the bit­coin ETF race isn’t exact­ly attrac­tive right now, con­sid­er­ing the SEC has blocked every such launch attempt over the last decade. 

Read more: Delays mount: SEC defers rul­ing on Black­Rock, Fideli­ty bit­coin ETFs

“Who would pos­si­bly want to join the stam­pede to offer a bit­coin ETF, giv­en that an over-zeal­ous reg­u­la­tor is mak­ing the usu­al process impos­si­ble, fees will race to the bot­tom, and there may be lit­tle dif­fer­en­ti­a­tion among spon­sors?” Sigel said. 

Though Edel­man expects oth­ers to look to offer a spot bit­coin ETF, there will be a few excep­tions, he said. 

“Some fund com­pa­nies and advi­so­ry firms spe­cial­ize in cer­tain mar­ket seg­ments, and they won’t offer cryp­to funds if those aren’t con­sis­tent with their brand,” Edel­man said. “But these will be in the minority.” 

JPMor­gan is “very unlike­ly” to join the bit­coin ETF race, accord­ing to Zheng, giv­en CEO Jamie Dimon’s repeat­ed crit­i­cisms of the asset class. Dimon called bit­coin a “hyped-up fraud” in Jan­u­ary dur­ing an inter­view with CNBC.

Van­guard, whose US ETFs man­age near­ly $2.2 tril­lion, has not sig­naled any inter­est in the space to date.

Chief invest­ment offi­cer Greg Davis called cryp­to “more of a spec­u­la­tive asset class” in May 2022. He added that while the firm finds blockchain tech­nol­o­gy com­pelling, cryp­to “doesn’t fit from an invest­ment perspective.”

JPMor­gan and Van­guard did not return requests for comment. 

Edel­man said there will even­tu­al­ly be wide­spread avail­abil­i­ty of spot bit­coin ETFs from most reg­is­tered invest­ment advis­ers (RIAs) and bro­ker­age firms. Wire­hous­es, he added, are like­ly to be slow­er to offer a spot bit­coin ETF — whether it’s their own prod­uct or ones issued by others.

“They will cer­tain­ly engage even­tu­al­ly due to demand from both their reps and their clients,” Edel­man said. “The bar­ri­er to all this is the SEC’s refusal to approve the appli­ca­tions to date. There is wide­spread opti­mism that this will soon change.”

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