- 11 spot bitcoin exchange-traded funds approved yesterday will start trading today.
- The ETFs will be listed on three different exchanges NYSE Arca, Cboe BZX and Nasdaq.
- Spot bitcoin ETFs will make it easier for investors to gain exposure to bitcoin as they can trade the ETF through their brokerage account.
- Multiple bitcoin ETFs hitting the market today sparked a fee war among issuers, with each trying to entice investors with waivers and fee reductions.
The Securities and Exchange Commission (SEC) ended months of speculation this week by approving the first-ever spot market Bitcoin Exchange Traded Funds (ETFs). Here’s what you need to know about the ETFs that can start trading from Today.
1) Which new bitcoin ETFs start trading today and where?
The SEC has approved eleven new ETFs that will be listed on the NYSE Arca, Cboe BZX, and Nasdaq exchanges. The following is a list of the ETFs trading on each exchange and their tickers:
NYSE Arca will list and trade shares of the Grayscale Bitcoin Trust (GBTC), the Bitwise Bitcoin ETF (BITB), and the Hashdex Bitcoin ETF (DEFI). DEFI currently trades as a bitcoin futures ETF and received approval to convert to a spot product, but Hashdex corrected an initial announcement to clarify that the change in name and investment strategy will occur at a later date.
Cboe BZX will list and trade shares of the ARK 21Shares Bitcoin ETF (ARKB), the Invesco Galaxy Bitcoin ETF (BTCO), the VanEck Bitcoin Trust (HODL), the WisdomTree Bitcoin Fund (BTCW), the Fidelity Wise Origin Bitcoin Fund (FBTC), and the Franklin Bitcoin ETF (EZBC).
Nasdaq will list and trade shares of the iShares Bitcoin Trust (IBIT) and the Valkyrie Bitcoin Fund (BRRR).
2)How does a Bitcoin ETF work?
When you buy a share of an ETF, you are buying into a basket of securities that the ETF holds in its portfolio—in this case it’s bitcoin. The value of your investment will correlate to the change in bitcoin prices.
Using BlackRock’s iShares Bitcoin Trust as an example, the ETF will be listed on the Nasdaq exchange. Pricing of the ETF will be calculated daily using the CF CME Bitcoin Reference Rate, which “aggregates” the notional value of bitcoin trading across major bitcoin spot exchanges.
3)How can I trade Bitcoin ETFs?
Trading bitcoin in the new ETFs will be easier than buying the cryptocurrency directly on exchanges. Investors can simply buy and sell shares in the new funds via their current brokerage account.
Buying bitcoin (BTCUSD) directly involves the use of a Hot or Cold storage wallet and the requirement to maintain the private and public keys, which are cryptographic strings of letters and numbers required to make crypto transfers from your wallet. The complicated storage and the lack of SEC regulation on the exchanges were seen as a major deterrent to retail and institutional adoption of BTC.
4)Are there fees involved?
Trading in ETFs involves a fee but the imminent approval of a large number of new funds has sparked competition among providers. The new bitcoin investment vehicles will see lower fees and waivers for the first months of trading.
Bitwise said it would levy a 0.20% management fee for its spot bitcoin ETF, compared with the 0.37% average for current U.S. ETF products in 2022. VanEck’s set its expense ratio at 0.25% while ARK Invest’s 21Shares planned 0.21% fees. The world’s largest asset manager BlackRock is set to charge 0.25%.
Early investors can also benefit as Bitwise said it will waive fees on the first $1 billion invested for the first six months. Ark also announced a fee waiver for six months or the first billion dollars invested whichever occurs first. BlackRock set a waiver period of 12 months or the first $5 billion invested.
Correction—Jan. 11, 2024: This article was updated to reflect the correction and clarification from Hashdex.