Gamdom: What to expect now that SEC approved Bitcoin ETFs

The Securities and Exchange Commission (SEC) finally approved exchange-traded funds (ETF) for Bitcoin (BTC) investments after years of resistance against cryptocurrencies. This marks the dawn of a new era in the blockchain industry as it opened the floodgates for all types of crypto. 

The SEC is still standing firm against cryptocurrencies in general. They wish to warn all investors trading cryptocurrencies because of its inherent volatility. Nevertheless, they approved the first crypto exchange-traded products (ETP) to follow BTC’s spot trading price. 

This decision is enough to not only revitalise the excitement in the blockchain space but also open new opportunities for all crypto. Enthusiastic players in platforms like Gamdom anticipate how this will cause an upward trend and reach a new price ceiling in 2024, making all casino prizes more lucrative than ever. That is the potential Bitcoin ETF approval carries and decentralised finance (DeFi) will be better for it.

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What is a Bitcoin ETF?

To grasp the concept, it’s best to clarify what a Bitcoin ETF is, first. This is a type of pooled investment an exchange uses to invest in BTC and related futures and stocks. All clients joining the ETF earn passive revenue while they have money in the pool and how that would be scaled with the size of funds provided. 

Bitcoin ETF is exclusively focused on BTC. An Ethereum (ETH) ETF is also under consideration but the SEC hasn’t given any approval for it yet and these two are separate offerings. Likewise, Bitcoin ETF is also not included in a blockchain ETF which is focused on stocks, futures, and securities related to blockchain companies in general. 

If you want to earn income from Bitcoin spot market trends, then the Bitcoin ETF is the optimal choice. Putting money in any other exchange-traded product will not give you the same benefits as BTC market trends. 

Different kinds of Bitcoin ETFs approved by the SEC 

The SEC has listed the 11 offerings that they greenlit on 10th January 2024. Here’s a list of all of them and what’s included in their package:

1. BlackRock’s iShares Bitcoin Trust (IBIT)
   • Listed on National Association of Securities Dealers Automated Quotations (NASDAQ).
   • Bitcoin spot ETF with 0.25% standard fee (0.12% for the first $5 billion in assets or within the first 12 months).
2. GrayScale Bitcoin Trust (GBTC)
   • Listed on the New York Stock Exchange Archipelago (NYSE Arca).
   • Formerly a Bitcoin trust fund turned into a Bitcoin spot ETF with a standard fee starting at 1.5%, formerly 2% before conversion.
3. ARK 21Shares Bitcoin ETF (ARKB)
   • Listed on the Cboe BZX exchange.
   • ARKB is a Bitcoin spot ETF with a 0.21% standard fee waived for the first 6 months or until assets under management (AUM) reach $1 billion.
4. Bitwise Bitcoin ETF (BITB)
   • Listed on NYSE Arca.
   • BITB is a Bitcoin spot ETF with a 0.20% standard fee and it’s waived for the first 6 months or until AUM reaches $1 billion.
5. WisdomTree Bitcoin Fund (BTCW)
   • Listed on the Cboe BZX Exchange.
   • BTCW Bitcoin spot ETF has a 0.3% standard fee that is waived for the first 6 months or until they get $1 billion AUM.
6. Invesco Galaxy Bitcoin ETF (BTCO)
   • Listed on the Cboe BZX exchange.
   • A joint Bitcoin spot ETF between Invesco and Galaxy Digital with a 0.39% standard fee. It’s waived for the first 6 months or until AUM becomes $5 billion.
7. VanEck Bitcoin Trust (HODL)
   • Listed on the Cboe BZX exchange.
   • Bitcoin spot ETF with 0.25% standard fee. VanEck is donating 5% of profits to Bitcoin core developers.
8. Franklin Bitcoin ETF (EZBC)
   • Listed on the Cboe BZX exchange.
   • Bitcoin spot ETF with 0.19%, reduced from 0.29% on 13th January. Fees are also waived until 2nd August 2024 or until AUM reaches $10 billion.
9. Fidelity Wise Origin Bitcoin Trust (FBTC)
   • Listed on Cboe BZX exchange.
   • Bitcoin spot ETF with a 0.25% standard fee. It’s waived until 1st August 2024.
10. Hashdex Bitcoin Futures ETF (DEFI)
    • Listed on NYSE Arca.
    • Formerly a Bitcoin futures ETF converted to a Bitcoin spot ETF with a 0.94% standard fee.
11. Valkyrie Bitcoin Fund (BRRR)
    • Listed on NASDAQ.
    • Bitcoin spot ETF with a 0.25% standard fee. It is fully waived for the first three months.
       

Almost all Bitcoin ETFs on this list have Coinbase as the custodian except for HODL which opted for Gemini, instead. Meanwhile, Fidelity opted to self-custody Bitcoin underlying the FBTC ETF. This decision can affect the overall profit from trading because the issuers have to pay the fees for such services. 

How is investing in Bitcoin ETF different from BTC directly?

The SEC’s approval of the Bitcoin ETF, despite reservations about direct BTC trading, stems from the unique advantages ETFs offer. With the help of ETFs, investors can profit from an asset’s success without having to be directly involved. That means exchanges handle the storing, buying, and selling of digital assets, keeping the clients safe from losses and fraud while also ensuring profit.

This difference gives ETF nuanced pros and cons compared to being a BTC trader:

Pros of Bitcoin ETF

• The ETF issuer is an asset management company equipped with resources and services fully dedicated to trading assets. Therefore, they have a better understanding of the asset and its market trends, giving them better chances to profit than individual traders.
• Clients of these issuers don’t have to keep track of market trends or dedicate time to understand its indicators. Therefore, they can be hands-off with confidence that their funds are in the hands of experts.

Cons of Bitcoin ETF

• A Bitcoin ETF charges annual fees from their clients. This is the income they get in exchange for their services as an asset management company.
• You can’t control when to buy or sell BTC. Therefore, it can be a strong turn-off for traders who have a deep understanding of market trends.
• Bitcoin ETFs are focused solely on BTC futures, limiting their use to other investments. This means the exchange cannot diversify its portfolio. The best they can do is to either find favourable prices or hold off until the market is in a better state. 
   

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What is the SEC and its role in Bitcoin ETF’s success?

The Securities and Exchange Commission (SEC) is the oversight agency of the US government responsible for regulating securities markets. Their goal is to protect investors from fraud and how they define such depends on their regulatory framework for various investments. Investors' trust in exchanges and brokerages often depends on SEC approval due to their role in ensuring market integrity. 

The best way to answer the question ‘What is Bitcoin ETF approval?’ in the context of SEC is that the product can be treated as securities. This is possible through the new framework that the commission started working on in the latter half of 2023. They can now protect investors from potentially fraudulent asset management companies, possibly reversing scams or suing scammers. 

SEC’s history with the crypto market

The SEC has maintained its strong stance against volatile digital assets. Most of the time, the reason is that these investment offerings don’t follow their framework of what securities should be and how it is tracked. It has led to conflicts with many companies like Binance and Coinbase over assets like ETH and Ripple (XRP).

What is the SEC’s current stance on cryptocurrencies? 

Despite the recent developments, the SEC remains unconvinced that Bitcoin or any crypto can be categorically treated as securities. Therefore, their stance remains adamantly against trading and holding digital assets. Any cryptocurrencies that meet their criteria must still be registered with the SEC and comply with its solutions before they become available for US buyers. 

How to invest in Bitcoin ETFs 

Investing in Bitcoin ETFs is accessible through the 11 issuers approved by the SEC. To become an investor, simply apply on brokerage/exchanges where these ETFs are listed. More Bitcoin ETFs may be approved in 2024 but these 11 that are already within SEC’s regulation are great options, too. 

How can the Bitcoin ETF approval affect the crypto industry?

The crypto market has indeed reached extreme heights and blockchain technologies are now applied to many industries. However, the community believes that it is still in its infancy. The biggest challenge for its growth is the wavering confidence in digital assets.

Bitcoin spot ETF approval bolsters confidence in BTC and its blockchain. That means demands are bound to skyrocket across all markets. The neat part is that Bitcoin is the most influential crypto in the digital asset industry so any good news about it has ripple effects on others. 

Ethereum ETF is now next with high confidence that the SEC will approve it in 2024. They may also consider ETPs for other altcoins. The most popular of which include Litecoin (LTC), Cardano (ADA), and Dogecoin (DOGE). Only time will tell how trends affect these spaces and players in platforms like Gamdom eagerly await what the future holds.

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