Decade-long journey US spot bitcoin ETF

SEC approves first U.S. bitcoin exchange-traded fund (ETF) after years of rejections. Multiple companies file for spot bitcoin ETFs.

The U.S. Securities and Exchange Commission (SEC) has given the green light to the first U.S. exchange-traded fund (ETF) that tracks the price of bitcoin, marking a significant victory for the digital asset industry after a decade-long effort to bring such a product to market.

The journey to this approval has been marked by key events that have shaped the landscape of cryptocurrency and regulation in the United States. It all began in 2008 when the mysterious figure known as "Satoshi Nakamoto" introduced the concept of bitcoin to the world. Fast forward to 2010, when the first retail transaction involving bitcoin took place, with a user paying 10,000 bitcoin for two Papa John's pizzas.

As bitcoin's popularity continued to grow, in 2013, Cameron and Tyler Winklevoss, co-founders of crypto exchange Gemini, filed their first application with the SEC to create a spot bitcoin ETF. Around the same time, Grayscale Investments launched the Bitcoin Investment Trust, an open-ended private bitcoin trust.

Over the years, the Winklevoss brothers made numerous adjustments to their application, and Grayscale also sought to convert its bitcoin trust into a spot bitcoin ETF. However, the SEC rejected these applications multiple times, citing concerns about the maturity of bitcoin markets and the lack of necessary controls to prevent manipulation on cryptocurrency exchanges.

Despite these setbacks, the digital asset industry continued to push for the approval of a bitcoin ETF. In 2020, Grayscale transformed its trust into an SEC-reporting entity, becoming the first publicly traded bitcoin fund in the U.S. The following year, the first ever spot bitcoin ETF launched in Canada, and Gary Gensler replaced Jay Clayton as SEC Chair.

In October of 2021, the SEC approved the ProShares Bitcoin Trust listed on the Chicago Mercantile Exchange (CME), marking the first U.S.-listed futures-based bitcoin ETF. This product quickly amassed $1 billion in assets within its first days of trading, outpacing the growth of any other ETF.

The following year, the SEC rejected several applications from would-be spot bitcoin ETF issuers, prompting legal action from Grayscale. Amidst this regulatory uncertainty, the crypto industry faced challenges, with multiple companies filing for bankruptcy and facing legal issues.

However, in 2023, there were signs of progress. Cathie Woods' ARK Investments filed for a spot bitcoin ETF, and BlackRock followed suit, raising hopes within the industry for the approval of these products. A federal appeals court ruled in favor of Grayscale, and Europe saw the launch of its first spot bitcoin ETF.

By 2024, the SEC had approved 11 proposals from issuers, including BlackRock, Fidelity, and VanEck, to launch spot bitcoin ETFs. This marked a turning point for the digital asset industry, as these products would provide investors with new opportunities to gain exposure to bitcoin through traditional financial channels.

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