As 2024 dawns, anticipation for Spot Bitcoin ETFs in the market has surged. Amidst these expectations, two Bitcoin exchange-traded fund issuers revealed the fees they plan to charge investors upon approval of their ETFs. Fidelity Investments Wise Origin Bitcoin Trust announced an annual fee of 0.39%, while Galaxy/Invesco’s BTCO fund will charge 0.59% annually.
Galaxy/Invesco aims to enhance investor appeal by waiving fees for the first six months of the fund’s operation. This information was sourced from a court filing dated December 29. Additionally, Jane Street Capital was mentioned as an “authorized participant” for Bitcoin ETFs by Fidelity, WisdomTree, and Valkyrie, potentially allowing them to benefit from arbitrage opportunities between the funds’ shares and the price of Bitcoin itself.
Valkyrie expanded its operations by appointing Cantor Fitzgerald as a second authorized participant. Galaxy/Invesco and BlackRock took significant steps by connecting with JPMorgan and also designating Virtu as an authorized participant.
The ETFs are expected to operate on a “cash” model for creation and payments. Authorized participants will not be able to invest in the funds by purchasing Bitcoin directly. Instead, they will make cash investments equivalent to the amount of Bitcoin they wish to invest, which will then be used by the fund to purchase BTC.
The U.S. Securities and Exchange Commission (SEC) has shown resistance to allowing broker-dealers to handle Bitcoin, leading to the adoption of this cash model solution. Bitcoin investors have long awaited the approval of a spot ETF in the United States, hoping it would attract new investors and potentially increase Bitcoin’s price. The SEC, after rejecting several Bitcoin ETFs, decided to conduct more comprehensive reviews to ensure compliance.
This decision may have been influenced by Grayscale’s legal victory against the SEC last August, which required the SEC to reconsider its arbitrary rejection of Grayscale’s spot Bitcoin ETF application. Since then, numerous new Bitcoin ETF applications and revisions have been submitted by entities including Fidelity, WisdomTree, Invesco Galaxy, and Bitwise. The exact date when the SEC will announce its decision remains uncertain, with some market leaders hinting at the next few days, while a recent report points to January 8-10.
