The journey to the approval of spot Bitcoin ETFs in the United States was a decade-long process marked by multiple applications, rejections, and regulatory challenges.
The Initial Steps
The first application for a spot Bitcoin ETF was submitted in 2013 by Cameron and Tyler Winklevoss, co-founders of Gemini. That same year, Grayscale Investments introduced the Bitcoin Investment Trust (GBTC). However, the SEC rejected the Winklevoss twins’ application in 2017, citing the immaturity of bitcoin markets.
Repeated Attempts and Rejections
Following their initial rejection, the Winklevoss brothers refiled in 2018, only to be denied again. The SEC’s concerns centered around market manipulation and the nascent state of the cryptocurrency markets. Meanwhile, Grayscale had to withdraw its application to convert GBTC into a spot Bitcoin ETF due to the regulatory environment’s underdevelopment.
Developments and Legal Battles
By 2020, Grayscale converted GBTC into an SEC-reporting entity, while VanEck and Bitwise made moves to launch their own spot Bitcoin ETFs. However, these efforts faced setbacks, including rejections and withdrawals of applications.
The Changing Regulatory Landscape
In 2021, the SEC, under new chair Gary Gensler, rejected VanEck’s proposal but approved the first U.S. futures Bitcoin ETF. Despite numerous rejections, including those for SkyBridge, Fidelity, Bitwise, and Grayscale, the latter firm took legal action against the SEC.
The Grayscale Court Ruling
In 2023, a federal appeals judge ordered the SEC to reevaluate Grayscale’s application, a decision that signaled a potential shift in the regulatory stance towards Bitcoin ETFs.
False Start and Final Approval
Despite a false start in January 2024, where a compromised SEC Twitter account prematurely announced the approval of Bitcoin ETFs, the SEC officially greenlighted the products on January 10, 2024. This historic decision led to the launch of 11 ETFs from various asset managers, including Ark Invest, BlackRock, and Fidelity, marking a significant milestone in legitimizing the crypto asset class. The first trading day saw these ETFs amass $4 billion in volumes with 700,000 trades.