US Securities and Exchange Commission (SEC) regulators approved the offering of spot bitcoin ETFs on Wednesday, January 10, giving the go-ahead to all 11 firms who applied to list these funds.
BRAD SMITH: Well, a milestone moment for Bitcoin regulators have given money managers the approval to launch 11 Spot Bitcoin exchange-traded funds. Now, every day investors can get exposure to the world's largest cryptocurrency without having to own it. There's a lot of optimism around the news that we heard from Coinbase CFO Alesia Haas last night. Here's what she had to say.
ALESIA HAAS: I believe very strongly that crypto is the future of money. And this is going to introduce more people to crypto, and eventually, the crypto economy. And we think it's a first step of many on their journey into the crypto economy.
BRAD SMITH: Yahoo Finance's Rachelle Akuffo is here to weigh in. Rachelle, so what does this mean for investors and for the next crypto ETF on deck?
RACHELLE AKUFFO: Well, certainly a lot of potential here. I want to set the stage here by saying FOMO is not a strategy. Don't get caught up in this.
If you weren't already a Bitcoin enthusiast, don't feel like you have to launch into this. But now that we do have these approved ETFs holding physical Bitcoin as their underlying asset, investors do have some comparing to do. So launching 11 spot Bitcoin ETFs means competition for fees.
You see Grayscale has the highest fees. They actually did have first mover advantage by having their trust set up back in 2013. You also have other factors, including liquidity and fund trading costs.
Now, if you're a buy-and-hold investor, you'll likely focus on the fees. Active traders more likely to focus on liquidity. Something to note, though, ETFs traditionally haven't had as much volatility as an asset like Bitcoin. But this is a very important first step.
As you mentioned there, in that sound bite there, Bitcoin's ETF custodian Coinbase laid that out when we spoke to their CFO. But for context, according to Morningstar US market index, they found that over the past five years, Bitcoin's standard deviation of returns is nearly four times that of the US stock market. But now, you have these floodgates that are open, and, of course, all eyes then on the next biggest crypto asset in terms of value and trading volume, and that is Ethereum.
Now, just to differentiate, Ether is the actual token. Ethereum is the blockchain network or the smart contract technology that it runs on. And, of course, SEC Chair Gary Gensler throwing cold water on the potential for an Ether ETF, saying Bitcoin's ETF approval should quote, "In no way signal the Commission's willingness to approve listing standards for crypto asset securities." So this is a very different product from Bitcoin.
And, of course, keep in mind, it took a decade for Bitcoin Spot ETF to begrudgingly get that SEC approval. But even as you look at the performance of Bitcoin and of Ethereum, it's a very different story than when you look at some of the other old coins and stablecoins that haven't fared as well, so tempered expectations here. And, of course, don't get caught up in the FOMO, of course. Back to you, guys.
SEANA SMITH: Yeah, Rachelle. And this is so interesting, I was speaking with Alesia Haas, the CFO of Coinbase, right after we got this approval last night, and she was talking about the fact that this is a massive moment here for the crypto industry, calling it a landmark decision here for the industry, for her business, and beyond, and what this is going to do for future interest, and maybe drawing in some of those investors who had been a little bit nervous about investing in crypto, investing in Bitcoin in the past because of everything that has happened within the industry over the last several years.
I'm curious from your perspective, whether or not you think this is going to be an inflection point for crypto. When you look ahead to 2024, if we do see some success from the launching of these ETFs, if we do see these ETFs generate a ton of interest from investors that maybe did not have crypto exposure before. What do you think that then is going to signal to us just about future products, how popular they will be, and how many more people would then be allocating some positioning within their portfolio to crypto?
RACHELLE AKUFFO: I mean, it's tough because this is obviously a worst case scenario here. As you mentioned, this is a landmark decision here. So this will really set the tone for what happens, and it could, perhaps, open the door to perhaps, what we might see with ether or perhaps, some of these other altcoins.
But as we saw there, the SEC clearly gave this approval begrudgingly, as we saw from Gensler's comments here. But as you look at how Spot Bitcoin ETFs have performed in Canada and other parts of Europe, we didn't see a huge upswing for Bitcoin. We didn't see a huge propagation of more Bitcoin Spot ETFs coming to the fray.
But I think when you have such huge institutional investors, such huge money managers, of course, in Grayscale and others, it does perhaps give it a bit more credence than some of these other Spot Bitcoin ETF launches, Seana.
BRAD SMITH: Yeah, well said, Rachelle. Two things that I wanted to add around this, because now, it is about the listings that are coming forward here on the day. We got a statement from NASDAQ this morning.
Of course, over at NASDAQ, ringing the opening bell, you're going to see iShares and BlackRock with I bits, which goes public today. That-- and it took me back to my days of publishing equity trader alerts over at the NASDAQ. But that aside and the little walk down memory lane, the listings that are coming forward, you're going to see I bits and then, additionally, Valkyrie, that's going to go public on NASDAQ BRRRR is the ticker symbol there.
And then, additionally, of course, our conversation that we're going to be having with Michael Sonnenschein of Grayscale GBTC is the one that's going to be converted. Julie Hyman is going to have that conversation. Plus, the wisdom tree folks-- they confirmed that there's BTCW that's going live at market open.
So all of these considered, these are the listings that some of the investors are going to be watching closely coming forward today. And after all of the press releases and the volume has moved forward here, it'll be a longer question of what's the long tail for some of this too, Rachelle. Right?
RACHELLE AKUFFO: It's true. Because a lot of this is it comes down to buy and hold investors. A lot of people who are investing in these ETFs aren't going to be the ones who are doing a lot of this active trading.
But as you mentioned, it has opened the floodgates here. People will be comparing on fees, on liquidity, on some of these funding costs as well. So we'll see if having first mover advantage really benefits, or if it will come down to some of the nickel and diming that people will do as they try and count their costs while they still want exposure to what is a very volatile asset in Bitcoin, guys.
SEANA SMITH: All right, Rachelle. Thanks so much for breaking that down for us.
