What are spot bitcoin ETFs, and when did they start?
UTXOHub · Bitcoin's history
A spot bitcoin ETF is a fund that owns bitcoin itself and whose shares are bought and sold on a stock exchange, like a company's shares. The US Securities and Exchange Commission (SEC) approved 11 of them on 10 January 2024, and trading began the next day, 11 January 2024.
What a spot bitcoin ETF is
ETF stands for exchange-traded fund: a fund whose shares trade on a stock exchange. “Spot” means the fund buys bitcoin itself. In the spot market, “cash is exchanged for bitcoin, with delivery expected immediately”, as a US appeals court explained in 2023. A futures fund holds futures instead: contracts “to buy or sell an asset at a predetermined price on a specific later date”. Because shares can be created and redeemed, an exchange-traded fund's price is kept from “deviating too far from the value of its underlying assets”, the court said. Buyers get bitcoin's price through an ordinary brokerage account and never hold a private keyPrivate keyThe secret number that lets you spend your bitcoin. Whoever knows it controls the coins, so it must never be shared. themselves.
The approval on 10 January 2024
On 10 January 2024 the SEC approved rule changes that let the NYSE Arca, Nasdaq and Cboe BZX exchanges list 11 funds: the Grayscale Bitcoin Trust, Bitwise Bitcoin ETF, Hashdex Bitcoin ETF, iShares Bitcoin Trust, Valkyrie Bitcoin Fund, ARK 21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Fund and Franklin Bitcoin ETF. The SEC's chair, Gary Gensler, wrote that “we did not approve or endorse bitcoin”, and told investors to “remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
The first day of trading
Trading began on Thursday 11 January 2024. Over $4.6 billion of shares changed hands that day, Bloomberg reported, including about $2.3 billion in the Grayscale Bitcoin Trust, an older fund that converted into an ETF, and over $1 billion in BlackRock's iShares Bitcoin Trust. That figure counts shares traded, not new money: every share sold had a buyer. Hashdex's fund did not hold bitcoin yet. It was “currently a futures product”, the firm said that day, and it switched to holding at least 95% spot bitcoin on 27 March 2024 (Hashdex and Tidal). In August 2026 Hashdex said it would close the fund, which held $14.7 million, after trading on 17 August (Decrypt).
Why approval took a decade
The Winklevoss Bitcoin Trust filed to register its shares with the SEC on 1 July 2013. SEC staff rejected its listing on 10 March 2017, saying “the significant markets for bitcoin are unregulated”, and the SEC turned it down again in 2018. The SEC wanted any exchange listing such a fund to have a deal to share trading data with a regulated market of significant size, to help catch anyone rigging the price. Every bitcoin fund proposed failed that test, the court later wrote.
The Grayscale court case
In 2022 the SEC approved two funds holding bitcoin futures but rejected Grayscale's fund, which would hold bitcoin itself. Grayscale asked the courts to review that decision. On 29 August 2023 the US Court of Appeals for the D.C. Circuit ruled that the rejection “was arbitrary and capricious because the Commission failed to explain its different treatment of similar products”. In its January 2024 order the SEC found that prices on spot exchanges and on the CME, the regulated market where bitcoin futures trade, move in “close (although not perfect) alignment”, so the exchanges' data-sharing deal with the CME could help catch price rigging.
References
- US Court of Appeals for the D.C. Circuit, “Grayscale Investments, LLC v. Securities and Exchange Commission, No. 22-1142”, 29 August 2023.
- US Securities and Exchange Commission, “Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units”, 10 January 2024.
- US Securities and Exchange Commission, “Statement on the Approval of Spot Bitcoin Exchange-Traded Products”, 10 January 2024.
- Bloomberg, via Bloomberg Law, “Bitcoin ETF Trades Top $4.6 Billion in 'Ground-Breaking' Day”, 11 January 2024.
- Hashdex, “CORRECTION: Hashdex and Tidal Announce Approval of Listing Rule for U.S. Spot Bitcoin ETF”, 11 January 2024.
- Tidal Commodities Trust I, filed with the SEC, “Tidal and Hashdex Announce Trading of U.S. Spot Bitcoin ETF”, 26 March 2024.
- Decrypt, “Hashdex to Shut Down Bitcoin ETF After Struggling to Gain Assets”, 4 August 2026.
- US Securities and Exchange Commission (EDGAR), “Winklevoss Bitcoin Trust, Form S-1”, 1 July 2013.
- US Securities and Exchange Commission, “Order Disapproving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, to BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, to List and Trade Shares Issued by the Winklevoss Bitcoin Trust”, 10 March 2017.