In a landmark decision, the Securities and Exchange Commission approved 11 Bitcoin spot ETF applications on 10th January 2024. Bitcoin ETFs backed by direct asset prices were first introduced in 2013 in the country. Therefore, the launch was marked by a considerable amount of excitement and speculation.
Before ETF listings in the US, investors hailing from the region were accessing European and Canada-based ETPs. However, the new spot ETF listings have changed the dynamics such that investors are liquidating their foreign ETP holdings and investing in US-based ETFs.
As per analysts, the main reason for the redirect is additional liquidity and accessibility of US-based ETF listings. The difference has also prompted investors from the European sector to invest in US-based spot ETFs. Another important reason cited by market analysts is the trading-free war that is serving as a competition to the European ETPs.
Before the final approval deadline, applying firms repeatedly amended S1 filings. At the time, European ETP applicants are following the same practice. Two major asset management firms Invesco and WisdomTree have decided to decrease the trading fees by 60% for the listed ETPs in Europe.
WisdomTree and Invesco Slash Fees Following US Bitcoin ETFs
Invesco has listed a direct Bitcoin ETP valued at $137 million in Europe. The firm recently reduced the trading fee of the ETP from 0.99% to 0.39%. At the same time, WisdomeTree’s direct Bitcoin ETP has decreased fees from 0.95% to 0.35%. It is important to mention that European ETPs are fashioned as exchange-traded notes (ETNs).
ETNs investors gain exposure in debt security whereas ETF allow investors to purchase a portion of backing reserves. As per analysts, the recent ETP fee cuts are an attempt to stop the capital outflows and compete with the competing ETF listings in the US.
Before the approval of US-based ETFs, investors from the region were quoting Canadian and European ETPs as potential investment options. However, there are now 11 Bitcoin spot ETFs in the United States such that the demand for European ETPs has declined.
Gary Buxton, the head of European ETFs at Invesco, told Financial Times that various ETFs operating in the United States have lowered fees to ensure a balance between the forces of supply and demand among investors.
This situation has led to considerably lower fees in comparison to Europe-based ETNs. The US-based Bitcoin spot ETFs listed on one exchange platform are more accessible to European investors and generate billions in intraday trading.
SEC Comments on Grayscale’s Spot Ether Application
The Securities and Exchange Commission recently issued a comment regarding the proceedings in the matter of Grayscale’s Ethereum spot ETF application. SEC noted in a notification issued on 25th January 2024 that it is going to finalize the matter of rule change for the applicant that will allow the fund to get a listing at NYSE Arca.
The regulatory agency has extended the deadline by 35 days to receive public comments regarding the fund application. The notification regarding spot Ether ETF was issued only 15 days after the approval of Bitcoin spot ETF applications on 10th January 2024. Grayscale filed for conversion of ETH trust into a spot ETF in October last year. Bloomberg analyst James Seyffart has projected a sporadic Ether spot ETF delay and cited 23rd May 2024 as an important date.