The issuers of two proposed Bitcoin exchange-traded funds (ETFs), Fidelity Investments and Galaxy/Invesco, have unveiled the fees they intend to charge should their ETFs receive approval. These revelations come as Bitcoin enthusiasts anticipate the possibility of a US-based Bitcoin ETF, which some believe could have a transformative impact on the cryptocurrency market.
Fidelity Investments has proposed an annual fee of 0.39% for its Wise Origin Bitcoin Trust, while Galaxy/Invesco plans to charge a slightly higher fee of 0.59% per year for its BTCO fund. Galaxy/Invesco has also announced that it will waive the fee for the first six months of the fund’s operation, potentially enticing early investors.
These fee structures were disclosed in a recent court filing dated December 29, as reported by Fortune. The unveiling of these fees is a significant development for potential investors and has added to the growing momentum surrounding Bitcoin ETFs.
Authorized participants and arbitrage opportunities
Jane Street Capital is set to be the “authorized participant” for the Bitcoin ETFs of Fidelity, WisdomTree, and Valkyrie. This designation implies that Jane Street Capital will have the privilege of arbitraging price differences between the ETFs’ shares and the actual price of Bitcoin.
Valkyrie has also named Cantor Fitzgerald as a second authorized participant, while Galaxy/Invesco and BlackRock have appointed JPMorgan and Virtu as their authorized participants.
This move to involve authorized participants in the ETF ecosystem aligns with the United States Securities and Exchange Commission’s (SEC) desire to establish a “cash” model for creation and redemption.
Under this model, authorized participants will not purchase and deposit Bitcoin directly into the funds. Instead, they will deposit the equivalent cash amount the fund will use to acquire Bitcoin. The SEC’s decision to adopt this approach reflects its caution about allowing broker-dealers to directly handle Bitcoin.
The long-awaited Bitcoin ETF
Bitcoin holders have long anticipated the approval of a spot ETF in the United States, hoping it could introduce new investors to the cryptocurrency market and potentially drive up its price. The SEC has rejected multiple Bitcoin ETF proposals, citing concerns over market manipulation and lack of investor protection.
However, the tide appeared to turn in August when Grayscale Investments won a lawsuit against the SEC. In that landmark decision, a U.S. Court of Appeals ruled that the SEC had unfairly rejected Grayscale’s application for a spot Bitcoin ETF and must reconsider its decision.
Since then, a flurry of new applications and revised proposals for Bitcoin ETFs has flooded the SEC’s desk, including submissions from Fidelity, WisdomTree, Invesco Galaxy, and Bitwise. The cryptocurrency community remains on edge, awaiting an official announcement from the SEC regarding approving a Bitcoin ETF.