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Asset management giant Fidelity has recently filed with the U.S. Securities and Exchange Commission (SEC) a registration application for a bitcoin exchange-traded fund (ETF).

Fidelitys ETF filing is just the latest of many. In the past two months, after a large number of Bitcoin ETF applications were handed over to the SEC, the SECs attitude of do not approve may soon become unbearable.

In the past February, the first ETF backed by BTC rather than derivatives in North America was launched. The Purpose Bitcoin ETF became the worlds first Bitcoin fund for ordinary investors. The bitcoin ETF hit a new high of nearly $165 million on its debut day. It held more than 10,000 BTC in just one week. Since then, although trading has slowed, the ETF has surpassed 1 billion Canadian dollars (about 800 million U.S. dollars) within a month of its establishment.

Judging from the markets public feedback, it seems that many people did not expect the popularity of the Bitcoin ETF. At present, the Purpose Bitcoin ETF has become an investment vehicle preferred by all institutions.

According to the blockchain data platform Glassnode, as of March 22, the number of Bitcoin ETF holdings has reached 14,659.99.

Around the Bitcoin ETF, many institutions from Wall Street have become active.

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Batch ETF application strikes

In July 2013, the twin brothers of Winklevoss, a well-known American investor, filed a Bitcoin ETF application with the SEC for the first time, creating a precedent for ETF applications. The full name of ETF is Exchange Traded Fund, which is an open-end fund that can be traded on the stock exchange. Fund management companies can sell new fund shares to investors at any time, and they also need to buy back the funds they hold at any time at the request of investors. share. Through the Bitcoin ETF, many companies and institutions in the United States who want to buy Bitcoin have further solved the problem of compliance and reduced the risk and threshold of investing in Bitcoin.

For U.S. retail investors, ETF is considered to be a product that is very beneficial for ordinary investors to buy in the U.S. stock market. It allows investors to trade a basket of assets in the stock market. Bitcoin ETF stocks can track the price of Bitcoin. Investors effectively trade Bitcoin on the stock market. Bitcoin ETFs have long been highly anticipated.

In the long years after 2013, many institutions have made similar attempts, but they were all rejected by the SEC. According to public information and incomplete statistics from foreign media, 8 companies have successively applied to the SEC for Bitcoin ETFs, but they have not been successful.

The reasons for the SEC’s refusal are mainly that “the issuer cannot guarantee the potential market manipulation of Bitcoin”, “the price volatility of Bitcoin is huge”, and the “Bitcoin custody mechanism is not yet mature” at that stage, etc. The SEC has adopted a very cautious attitude towards alternative assets such as Bitcoin.

At the end of 2020, with the continuous breakthrough of the price of Bitcoin, the popularity of the encryption market increased, and it coincided with the change of the SEC, and the former chairman Jay Clayton resigned. After the new SEC chairman took office, the possibility of the Bitcoin ETF application being approved has been raised again, and there may not be much time left for the SEC to think.

In contrast, Canada, which has long belonged to the North American market with the United States, took the lead in passing the application for Bitcoin ETF. At the beginning of 2021, Canadian asset management companies Purpose Investments and Evolve Funds have successively obtained approval from the Ontario Securities Commission (OSC) in Canada to issue Bitcoin ETFs. The first Purpose Bitcoin ETF has been welcomed by the market.

In Canada, a total of 3 Bitcoin ETFs were approved and listed throughout February, namely: Purpose Bitcoin ETF (trading code BTCC), Evolve Bitcoin ETF (EBIT), and CI Galaxy Bitcoin Fund (BTCX).

Interestingly, Gemini Trust Company (Gemini Trust Company) seems to stand behind the first two ETFs in the initial public offering, providing them with secondary custody. The Winklevoss brothers, the founders of Gemini and well-known investors in the encryption community, seem to have succeeded in their tactic of moving to Canada after their repeated applications for Bitcoin ETF were rejected.

Other proposed bitcoin ETFs are also awaiting approval, including prospectuses for bitcoin ETFs submitted by Horizons ETF Management (Canada), Arxnovum Investments and Accelerate Financial, according to documents from Canada’s System of Electronic Document Analysis and Retrieval (SEDAR). A preliminary decision document has been released.

Although Canada has successfully issued two Bitcoin ETFs, there is still a gap in the number of market participants and market activity in the two listing paths of the United States and Canada. At present, the price of Bitcoin has already hit a new high of more than 60,000 US dollars, and the current total market value has exceeded 1 trillion US dollars.

Huobi Research Institute pointed out in a report that at present, the market size of the United States is about 27 times that of the Canadian market. Under the circumstance that American retail investors cannot purchase Canadian ETF products smoothly, if the United States can approve Bitcoin ETF to enter the market, its Bitcoin ETF volumes are likely to explode with investor enthusiasm. Although the Canadian regulatory authorities were inspired by the various advantages of the cryptocurrency ETF product and launched the product first, but the size and complexity of the US market determines that it may have more concerns and it is difficult to follow the same innovative route as Canada.

During the period of strong institutional demand, a large number of Bitcoin ETF applications flocked to the SEC again.

On January 22, during the transition period of the US SECs re-election, the US investment management company VanEck once again resubmitted the application for the Bitcoin ETF, and plans to launch the VanEck Vectors Digital Assets ETF, which will track MVIS (a digital asset index provider) global digital assets The price and yield performance of a stock index. At the same time, the Chicago Board Options Exchange (Cboe) has also filed documents to list VanEcks proposed Bitcoin ETF. Recently, the SEC announced the relevant situation, and the VanEck Bitcoin ETF application has opened a 45-day review period. If approved, the ETF could become the first open bitcoin exchange-traded product in the United States.

On March 20, Skybridge Capital submitted an application for a bitcoin exchange-traded fund (ETF) to the US Securities and Exchange Commission (SEC). As early as January this year, Tianqiao Capital launched a Bitcoin fund.

In the US Stock + Bitcoin ETF (NASDAQ: SPBC) application submitted by Simplify Asset Management, there are also non-traditional combinations of stocks and cryptocurrencies for investors to choose from. For this fund of funds, 15% of the funds total assets will be invested in the Grayscale Bitcoin Trust (GBTC), indirectly investing in Bitcoin.

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Compliant investment vehicle for mainstream funds

Facing the new wave, Grayscale is also making preparations. Grayscale has released a number of ETF-related recruitment information in official information, triggering market speculation.

For a long time, entering the encryption market through Grayscale’s Bitcoin Trust has been the main channel for traditional institutional investors to purchase Bitcoin. On the other hand, ETFs allow market makers to create and redeem shares at will, and if there is sufficient liquidity, premiums or discounts will rarely occur. In the traditional market, its risk is also considered to be much smaller than that of closed-end trust funds such as GBTC, and ETF tools are more easily accepted by public funds and pension funds, and Canadian ETFs may become more popular.

In an interview on March 24, Grayscale CEO Michael Sonnenshein publicly stated that Grayscale is taking a wait-and-see attitude towards applying for a Bitcoin ETF, and Grayscale is preparing for this possibility. But for the actual approval of a Bitcoin ETF, the SEC may still not be ready for approval.

While the market was still arguing about the SECs attitude, the ETF effect had begun to spread.

First, the South American region took action. On the 3rd and 19th, Brazil also approved the first Bitcoin ETF in South America. The ETF was issued by the asset management company QR Asset Management and will be listed on the B3 of the Brazilian Stock Exchange under the code name QBTC11. Only in June will it enter the B3 open transaction.

On the other hand, this effect is also transmitted to ETH. Following the launch of its Bitcoin ETF, Evolve again submitted a preliminary prospectus for its Ethereum ETF (ETHR) to the Canadian Securities Regulatory Agency (CSA) in early March. According to the official introduction, ETHX will directly invest in Ethereum, and its assets will be priced using the Bloomberg Galaxy Ethereum Index under Bloomberg Index Services (this is also the settlement index for Ethereum futures contracts on CME).

Whether a variety of encryption ETF applications will be approved will become the focus of the markets next attention.

Yu Jianing, president of Huobi University, publicly analyzed: The successful approval of Bitcoin ETF means that as long as you have a compliant stock account, you can buy Bitcoin indirectly. For the Bitcoin market, users will increase by an unimaginable order of magnitude. , including traditional financial retail investors and institutions can buy a large number of bitcoins, and the market will usher in another dimension of upgrade.”

At the current stage, the market is still eager for new funds to enter. If Bitcoin-based ETFs can be issued and circulated, the market will have new expectations for the entry of a large number of user funds.

Some industry observers have also seen the huge demand among institutions. In early March, Mathew McDermott, head of digital assets at Goldman Sachs, released a survey result, which stated that more than one-third of the institutional clients surveyed by Goldman Sachs of respondents said they currently hold digital assets, and more than half of institutional clients intend to expand their digital asset portfolio in the coming months. They are witnessing huge institutional demand for Bitcoin and the crypto market and are not seeing any signs of abating as far as institutional demand is concerned.