What Is A Spot Bitcoin ETF?

By September 2023, the US Securities and Exchange Commission had approved bitcoin ETFs based on futures contracts, which track contracts rather than holding bitcoin, but had rejected applications for a spot bitcoin ETF that would track the current price, citing investor protection. The article explains that a spot ETF is an open-ended fund whose shares can be created or redeemed to keep its price close to bitcoin’s, unlike a closed-end trust such as the Grayscale Bitcoin Trust, whose shares cannot be redeemed for bitcoin.

BlackRock’s application for the iShares Bitcoin Trust included a surveillance-sharing agreement, which the SEC had seen as missing from earlier filings, and the article notes the firm’s record of only one rejection from 575 ETF applications. Drawing on the growth of gold ETFs after 2004, it sets out possible benefits, such as easier access and liquidity, alongside drawbacks including fees and regulatory dependence.