The Securities and Exchange Commission (SEC) is set to approve the first wave of Bitcoin ETFs (exchange-traded funds). Following this announcement, some issuers are currently competing for an early advantage in order to attract investors and customers.
Both Fidelity and Galaxy/Invesco released details on their new fees, while other issuers named authorised participants in order to set the stage for gaining an early-mover status. Invesco/Galaxy announced that it would waive fees in the first six months of operation and for the first USD 5 billion in assets held, which will be followed by a 0.59% fee. Fidelity announced that its fee will be at 0.39%.
Reuters also reported that the SEC requested issuers to file their last revisions to their applications by the end of 2023, which took place ahead of a launch date that is speculated to be around the 10th of January 2024 (representing the deadline for the SEC to approve or reject the first issuer in line).
As multiple issuers file updates on their applications, the details on the manner in which the ETFs will function came into focus. They will be developed in order to optimise the way institutional investors and authorised participants can design or redeem individual shares in the fund, as part of an arbitrage system that keeps the price of the ETF share close to the value of an underlying asset. As most ETFs hold traditional stocks or bonds (which are simple for authorised participants to buy or sell), a Bitcoin ETF will represent a more challenging model for investors.
Instead of having authorised participants buy or receive Bitcoin in a direct way from the issuer, the SEC pushed issuers to follow a cash model. This is expected to put the process of Bitcoin buying and selling in the issuer, reflecting the agency’s reluctance to allow broker-dealers to handle the overall Bitcoin strategy. SEC’s recent developments
In December 2023, the US Securities and Exchange Commission (SEC) rejected a petition by crypto exchange Coinbase, which sought new rules for the digital asset sector. The five-member commission decided to not implement new rules, insisting on a fundamental disagreement with Coinbase’s claim that existing regulations were `unworkable` for the crypto industry. At the same time, Coinbase announced its decision to fill a petition to review the SEC’s court settlements.
Earlier in July 2023, the SEC adopted new rules on cybersecurity, strategy, governance, as well as incident disclosure by public companies. The new regulations obliged registrants to reveal the material cybersecurity incidents that they had experienced in the past, as well as to disclose details on their cybersecurity risk management, strategy, and governance on an annual basis. SEC also adopted similar rules that were addressed to foreign private issuers.
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