A Decade-Long Battle for U.S. Spot Bitcoin ETFs: The Tug-of-War Between Crypto Firms, Wall Street, and the SEC
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A Decade-Long Battle for U.S. Spot Bitcoin ETFs: The Tug-of-War Between Crypto Firms, Wall Street, and the SEC
The final approval of spot Bitcoin ETFs in the United States stems not only from Bitcoin's growing prominence that capital can no longer ignore, but also from the relentless efforts and perseverance of professionals within the cryptocurrency industry.
Navigating Web3 tides with focused insightsAuthor: flowie, ChainCatcher
Editor: Marco, ChainCatcher
In the early hours of January 11, Beijing time, the U.S. Securities and Exchange Commission (SEC) officially approved 11 spot Bitcoin ETFs, granting entry to traditional asset management giants such as BlackRock, Fidelity, Invesco, Grayscale, and emerging capital firms.
The path to approval for U.S. spot Bitcoin ETFs has been long and winding. From the Winklevoss twins’ first application in 2013 for a Bitcoin-related ETF to the launch of the first U.S. spot Bitcoin ETF in 2024, Wall Street and U.S. regulators have engaged in a decade-long battle.
The eventual approval of U.S. spot Bitcoin ETFs is attributable not only to Bitcoin's growing influence that capital can no longer ignore but also to the persistent efforts and perseverance of professionals within the cryptocurrency industry.
Early Efforts by Crypto Investment Firms
The earliest application for a Bitcoin ETF dates back to 2013. On July 1 of that year, Cameron and Tyler Winklevoss applied to establish the Winklevoss Bitcoin Trust, stating in their filing: "The sponsors believe this trust is the first exchange-traded product designed to track the price of digital-based assets such as Bitcoin."
However, in 2017, the SEC rejected the Winklevoss application, citing concerns over "potential fraud or manipulation" due to the lack of regulation in the Bitcoin market. In the years that followed, numerous institutions attempted similar applications, all without success.
According to incomplete statistics from ChainCatcher, prior to the recent approval of spot Bitcoin ETFs, the SEC had rejected at least 30 such applications. Particularly in 2021, applications from 13 institutions were denied, primarily due to insufficient investor protection and concerns about market manipulation.
Yet in October of that same year, the SEC approved the first U.S. Bitcoin futures ETF—the ProShares Bitcoin Strategy ETF—after which Bitcoin futures ETFs from Valkyrie, VanEck, and others were gradually approved for listing.
This set the stage for Grayscale’s subsequent lawsuit against the SEC.
Grayscale first applied in October 2021 to convert its GBTC into a spot Bitcoin ETF. After repeated rejections, including one in November 2021 on grounds of non-compliance with the 1934 Securities Exchange Act, and another in June 2022 for failing to address concerns about fraud and market manipulation, Grayscale continued to press forward.
After multiple rejections, Grayscale filed a lawsuit against the SEC in June 2022, arguing that the SEC had failed to apply consistent standards to similar investment products—an arbitrary and capricious action violating the Administrative Procedure Act and the Securities Exchange Act of 1934.
Entry of Traditional Wall Street Giants
The crypto market entered a turbulent period in 2022, with collapses triggered by LUNA and FTX plunging the industry into a crisis of confidence. The progress of spot Bitcoin ETF applications temporarily stalled. It wasn’t until April 2023 that Ark and 21Shares resubmitted applications, becoming among the earliest institutions to do so that year. Under the review process, the SEC was required to make a decision by January 10, 2024.
Then, BlackRock’s submission of a spot Bitcoin ETF application brought renewed hope to the crypto industry. As the world’s largest asset manager, BlackRock’s move marked a major turning point for spot Bitcoin ETFs. Despite the SEC simultaneously launching regulatory lawsuits against major exchanges like Binance and Coinbase, BlackRock—often called the “ETF king”—had an impressive record of 576 ETF applications with only one rejection, along with deep ties to the SEC, reigniting optimism in the crypto market.
BlackRock’s entry may have also restored confidence among other institutions, prompting Wall Street heavyweights such as Fidelity, WisdomTree, and VanEck to announce their own applications.
Another positive development soon followed: in July 2023, Grayscale submitted a letter to the U.S. Court of Appeals for the District of Columbia Circuit, protesting the SEC’s approval of leveraged Bitcoin futures ETFs while continuing to reject spot Bitcoin ETFs like GBTC. In August 2023, Grayscale won its case against the SEC with a unanimous 3-0 ruling regarding the rejection of its GBTC conversion application, adding further momentum toward approval.
In the ruling, the judge stated that the SEC’s repeated denials of Grayscale’s request to convert GBTC into an ETF were “arbitrary and capricious,” noting that the commission failed to justify its inconsistent treatment of similar products.
However, in September, the SEC announced it would delay decisions on spot Bitcoin ETF applications from BlackRock, Fidelity, and others. Following the news, Bitcoin’s price dropped to $25,965, marking a 24-hour decline of up to 5.1%.
Thereafter, ongoing negotiations between spot Bitcoin ETF applicants and the SEC included multiple delays, application revisions, and meetings.
In October 2023, SEC Chair Gary Gensler shifted his stance on spot Bitcoin ETFs. In a public interview, he stated that staff were “considering” multiple spot Bitcoin ETF applications and emphasized that supporters must ensure their products are registered with the SEC through a public offering-like filing process.
Entering 2024, U.S. spot Bitcoin ETFs finally launched after years of anticipation.
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