Thirteen spot Bitcoin (CRYPTO: BTC) ETFs are currently awaiting approval from the Securities and Exchange Commission (SEC).
Up to this point, the SEC has denied similar exchange-traded fund (ETF) applications, but an appellate court ruled the SEC’s rejection was “arbitrary and capricious.”
The approval of a spot Bitcoin ETF would be big news for investors of all sorts. Whether you’re heavily invested in crypto or simply stashing money away in a retirement account, it’s worth paying attention to the SEC’s decision. It could open the door for many more investors to easily put their money to work in the emerging crypto asset class.
Why the new breed of Bitcoin ETFs is big news
Existing Bitcoin funds like the Grayscale Bitcoin Trust use derivatives like futures contracts to track the price of Bitcoin. However, those funds cannot actually redeem Bitcoin futures for the underlying asset, which can result in prices that diverge widely from the actual value of Bitcoin. Grayscale Bitcoin Trust notably traded at almost a 50% discount to its net asset value in late 2022.
GBTC Discount or Premium to NAV Chart
A spot Bitcoin ETF, on the other hand, will actually hold Bitcoin. That means the ETF will be able to track the value of the cryptocurrency much more closely.
Additionally, since the funds will hold Bitcoin instead of a derivative, it makes it more transparent for investors as to what they’re buying. Each share of the ETF will correspond with a certain amount of Bitcoin held by the fund.
That said, spot Bitcoin ETFs will still charge fees for shareholders in the form of expense ratios. And with such strong interest in the new breed of ETFs, it’s important for investors to pay attention to these fees and what they mean for their investment.
Here’s how much you’ll pay in fees to own a Bitcoin ETF
The following four fund companies have detailed how much they plan to charge investors holding their respective Bitcoin ETFs.
Fund
Expense Ratio
Fidelity Wise Origin
0.39%
Invesco Galaxy
0.59%
Valkyrie
0.8%
ARK 21Shares
0.8%
Data source: SEC Filings.
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Invesco Galaxy plans to waive the fee for the first six months for the first $5…
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