Bitcoin ETF saga reaches ‘pattern break’ as amendments pile up

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The ongo­ing amend­ments to bit­coin ETF pro­pos­als by var­i­ous fund issuers sig­nal an approval could be com­ing, indus­try watch­ers have said. 

Ophe­lia Sny­der, the pres­i­dent of bit­coin ETF hope­ful 21Shares, said Mon­day that engage­ment with reg­u­la­tors indeed has a dif­fer­ent feel this time around. 

“Right now everyone’s watch­ing this race on a minute-by-minute, day-by-day basis…is it today, tomor­row?” she not­ed dur­ing an inter­view on Bloomberg TV. “I think that’s a chal­leng­ing way of look­ing at this. I think the clear­est indi­ca­tion is that we’re in a pat­tern break.”

The US Secu­ri­ties and Exchange Com­mis­sion has nev­er allowed a spot bit­coin ETF to come to mar­ket — despite repeat­ed attempts by fund issuers over the last decade. 21Shares has been through the process before, first fil­ing for a spot bit­coin ETF with Ark Invest in 2021.

The SEC denied the firms’ pro­posed fund in March 2022 and blocked a sec­ond attempt from the com­pa­nies in Jan­u­ary. The two firms then re-filed for a bit­coin ETF in April

The way the agency would inter­act with fund groups look­ing to launch spot bit­coin ETFs, and on which issues, has his­tor­i­cal­ly held steady, Sny­der said. 

“I think we’re see­ing a lit­tle bit of a dif­fer­ence there now with peo­ple actu­al­ly pro­vid­ing amend­ments to doc­u­ments and pro­vid­ing a lit­tle more col­or on what these prod­ucts are actu­al­ly going to look like in the mar­ket,” she added. “That’s real­ly pos­i­tive, because, very can­did­ly, change in behav­ior might actu­al­ly result in a change of out­come, and that’s real­ly exciting.”

Read more: Is bitcoin’s ETF-fueled ral­ly to $35K pre­ma­ture? Well, maybe

21Shares and Ark Invest amend­ed its bit­coin ETF pro­pos­al for a third time Mon­day. Oth­er issuers — such as finan­cial giants Black­Rock, Fideli­ty and Invesco — have updat­ed sim­i­lar appli­ca­tions in recent weeks. 

Scott John­son, a gen­er­al part­ner at Van Buren Cap­i­tal, point­ed out “pret­ty tech­ni­cal updates to the dis­clo­sures” in a series of X posts, not­ing it “seems like there are pro­duc­tive con­ver­sa­tions hap­pen­ing with the SEC.”

The amend­ment notes a “spon­sor fee” of 0.80% — offer­ing a glimpse at what the fund could cost for investors. 

“We real­ly did expect these to price a bit high­er than what you would see from a more tra­di­tion­al ETF…because there is quite a bit of incre­men­tal infra­struc­ture and exper­tise baked in here,” Sny­der said. 

The futures-based ProShares Bit­coin Strat­e­gy ETF (BITO), which is cur­rent­ly the largest cryp­to ETF in the US, car­ries an expense ratio of 95 basis points.

BITO has seen net inflows of $207 mil­lion so far in Novem­ber, accord­ing to, as its assets under man­age­ment now stand at rough­ly $1.4 billion. 

21Shares and Ark Invest launched its own suite of cryp­to futures ETFs last week. 

“I think you’re going to see quite a bit more inter­est in these prod­ucts than futures [ETFs], espe­cial­ly over the medi­um term,” Sny­der said of spot bit­coin funds. “I think the com­bi­na­tion of bet­ter access and, quite frankly, real­ly inter­est­ing devel­op­ments in the under­ly­ing tech­nol­o­gy are coin­cid­ing for a poten­tial changed mar­ket outlook.”

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