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The Chronology of a Rocky Decade-Long Road to Spot Bitcoin ETF Approval

The long tale of the spot Bitcoin ETF approval

The cryptocurrency world celebrated a watershed moment on January 10, 2024, as the U.S. Securities and Exchange Commission (SEC) granted full approval to the first spot Bitcoin Exchange-Traded Fund (ETF). This historic decision culminated a decade-long quest, signifying a major leap forward in the mainstream acceptance of digital currencies. It began on July 1, 2013, when Cameron and Tyler Winklevoss, notable figures in the crypto sphere, filed the inaugural application for a spot Bitcoin ETF in the United States.

Their ambitious endeavor, however, faced a series of hurdles. The initial rejection by the SEC in 2017, citing concerns over Bitcoin's regulatory status, marked the start of a challenging but persistent journey towards achieving this revolutionary financial product.

Challenges and initial attempts for approval

The road to approval for the spot Bitcoin ETF was anything but smooth. After the SEC's initial rejection of the Winklevoss twins' application in 2017, the crypto community faced a significant setback. This decision echoed across the financial world, with many experts questioning Bitcoin's readiness for mainstream financial markets. Despite this, the industry persevered. That same year, the Grayscale Bitcoin Trust (GBTC) emerged as a beacon of hope. Although not an ETF, GBTC became the first publicly traded Bitcoin fund in the U.S., receiving a nod from the Financial Industry Regulatory Authority (FINRA) in 2015. This development was a critical step forward, albeit not the ultimate goal of a spot-based ETF.

In the following years, the Winklevoss twins redoubled their efforts, submitting a second application for a spot Bitcoin ETF. Yet, in 2018, the SEC once again turned it down, maintaining their stance on the largely unregulated nature of Bitcoin. These rejections, however, didn't dampen the spirits of the crypto enthusiasts; they only fueled the determination to break through the regulatory barriers.

International developments and continued efforts

As the U.S. grappled with regulatory hesitations, the global scene began to shift. In a bold move, Canada emerged as a frontrunner in embracing Bitcoin ETFs. In 2021, Fidelity Canada launched its own spot Bitcoin ETF, a significant stride that caught the attention of investors worldwide. This development marked Canada as the first country to approve a spot Bitcoin ETF, showcasing Fidelity Canada as the largest asset manager to achieve this feat at the time. This international progress served as a catalyst, reigniting the hopes and efforts within the U.S. cryptocurrency community.

Eric Balchunas (@EricBalchunas) November 30, 2021:

“SEMI-SHOCK: Fidelity launching a spot bitcoin ETF in Canada this week. Didn't know about this. Will easily be the biggest asset manager to date with a bitcoin ETF.”

Back in the United States, the quest for a spot Bitcoin ETF continued with renewed vigor. High-profile asset managers like SkyBridge, Fidelity, and Bitwise joined the fray, filing their own applications. Despite these concerted efforts, the SEC's stance remained firm, leading to a series of rejections throughout 2022. 

Undeterred, Grayscale Investments, one of the applicants, launched a lawsuit against the SEC following the denial of its application to convert GBTC into a spot-based ETF.

The turning point and final approval

The breakthrough moment in the saga of the spot Bitcoin ETF came in 2023, when the landscape began to shift dramatically. Notably, U.S. asset managers BlackRock and ARK Invest entered the race, heightening anticipation and hope within the crypto community. The tide turned when Grayscale won a significant legal battle. In August 2023, U.S. Court of Appeals Circuit Judge Neomi Rao ordered the SEC to review Grayscale's petition, a decision that, while not guaranteeing approval, infused the community with optimism.

This judicial push proved instrumental. In the closing months of 2023, intense discussions ensued between the SEC and the spot ETF applicants. By early January 2024, the ETF issuers had finalized their applications, setting the stage for a monumental decision. Despite a brief moment of confusion caused by a compromised tweet from the SEC's official account, clarity soon emerged. 

Gary Gensler (@GaryGensler) January 9, 2024:

“The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.”

On January 10, the SEC granted full approval to multiple spot Bitcoin ETF applications, including those from ARK 21Shares, Invesco Galaxy, and Fidelity. This historic decision marked the culmination of years of persistent efforts and opened a new chapter in cryptocurrency investment in the United States.

Trading begins and market response

January 11, 2024, marked a moment as the first spot Bitcoin ETF began trading, quickly attracting $2 million in pre-market shares. This strong debut, highlighted by significant gains on the Nasdaq, reflects the market's confidence in the new investment vehicle. Offering direct Bitcoin exposure, this ETF symbolizes a major step in integrating cryptocurrencies into traditional financial portfolios, cementing their growing significance in the global investment landscape.