Axios Crypto

March 12, 2024
The odds of a spot ether ETF are dwindling. Bitcoin spot ETFs are pulling record flows, but issuers' gain is customer pain (in fees). Plus, a zine.
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Today's newsletter is 1,069 words, a 4-minute read.
๐ค๏ธ 1 big thing: ETH ETF approval odds slim
Illustration: Shoshana Gordon/Axios
Smart crypto is bearish on a near-term ether ETF approval, Crystal writes.
The big picture: Folks in and out of the industry have cut the odds on approval below a coin flip, despite the 60% gain in ETH prices over the last 30 days and bullish vibes in the digital assets market.
- "It brings me no joy to be an ETH ETF bear," Jake Chervinsky, chief legal officer of the Variant Fund, said yesterday on social media.
- "Same. Ppl equating my approval bearishness as being btc maxi," Eric Balchunas, senior ETF analyst at Bloomberg, said in response.
By the numbers: Bloomberg's Balchunas now puts odds of approval by May at 35%, down from 70% in January.
Between the lines: The decline in sentiment can largely be attributed to two things: Silence from the SEC on the issue, and the differences between ETH's ETF situation, and that of bitcoin's at this point in its process.
- Wall Street and Crypto Twitter lit up like a disco ball leading to the Jan. 10 approval of spot bitcoin ETFs โ there was chatter around details of the launches.
- There hasn't been much talk about ETH ETFs in comparison.
- "Intel not good," Balchunas tells Axios. "We thought [the SEC] would've issued comments by now."
With bitcoin ETFs, the SEC punted on applications for roughly a decade, mostly citing concerns of market manipulation.
- It's unlikely that the regulator uses that reason again, as a court ruling vacated that decision.
- On the flip side, if the SEC rejects ETH ETF applications with a different reason โ it's less likely to be sued this time.
- "Less motivation for a lawsuit," Balchunas tells Axios.
Zoom in: First, because there aren't a bunch of ETH trust investors mad about being stuck in one.
- Second, the SEC approved ETH futures ETFs in October โ none of which forced the SEC to issue a decision on a 19b-4 application, which was what Grayscale's bitcoin ETF lawsuit took aim at.
The other side: When SEC commissioner Hester Peirce was asked about where the SEC is on ETH ETF approval at ETHDenver two weeks ago, she gave a lawyerly answer, saying the applications were being considered.
- She added that the SEC was still in "enforcement only" mode and recommended reading the spot bitcoin ETF comments from SEC chair Gary Gensler and commissioner Caroline Crenshaw "to get a sense of the world we're in right now."
Between the lines: Chair Gensler cited the Grayscale ruling for deciding that a spot bitcoin ETF approval was the "most sustainable path forward."
- Commissioner Crenshaw dissented.
The intrigue: Gensler has previously argued that ether might be considered a security after its transition to proof-of-stake in 2022, though he has since stopped short of categorizing it in any one way.
- During a House financial services hearing last year, Gensler evaded Rep. Patrick McHenry's questions on whether ETH was a security.
๐ 2. Charted: Billion-dollar BTC flows

Digital asset investment products are snapping up superlatives, Crystal writes.
The big picture: Already this year, bitcoin ETFs and other crypto-linked funds gathered $10.3 billion, just shy of last year's total haul of $10.7 billion, according to a recent CoinShares report.
- The group set a record for weekly inflows as BTC reached new all-time highs.
Between the lines: The world's largest digital asset accounts for a huge chunk of that activity, but other big market cap tokens are getting some attention too.
- SOL funds took in $24 million in inflows last week after a bout of outflows โ maybe Pantera's interest in FTX's stash is helping.
๐ญ Crystal's thought bubble: Big flows into the various spot bitcoin ETFs are great for the issuers seeing some of that action, but it isn't necessarily great for their customers. (Read more below๐)
๐ธ 3. Record BTC flows mean fees
Illustration: Lazaro Gamio/Axios
BlackRock's IBIT raking in more than $10 billion in assets has the world agog โ though it means that IBIT investors will be paying more in fees now that the initial fee waiver no longer applies, Crystal writes.
The big picture: Most of the 10 spot bitcoin ETFs took fees to zero in the battle for billions โ but that was only for a certain time, and/or until a threshold in assets was reached in the battle for billions.
What we're watching: Grayscale is the only holdout that has neither cut fees nor offered a fee waiver for its ETF, GBTC.
- It is taking a different path.
Zoom in: Fidelity's Wise Origin Bitcoin ETF, or FBTC, has the longest discount among the funds with more than $1 billion in assets.
- It's waiving fees until August 2024, then will start charging an annual fee of 0.25%.
Between the lines: Spot bitcoin ETFs from Bitwise, WisdomTree, Invesco Galaxy, Valkyrie and Franklin all sport 0% fees right after their respective deals are applied, but they won't last much longer.
- BlackRock's IBIT and ARK 21Shares ARKB met the assets threshold early and now charge 0.25% and 0.21%, respectively.
- Bitwise, WisdomTree and Invesco Galaxy haven't triggered their assets thresholds, but their six-month fee waivers end in July.
- Valkyrie will start charging 0.25% after their three-month fee waiver ends April 10.
- Franklin's waiver runs as long as Fidelity's but is much smaller.
Catch up quick: VanEck announced yesterday that it would waive its 0.20% starting today for the first $1.5 billion in assets or until March 31, 2025.
๐ข 4. Catch up quick
Illustration: Shoshana Gordon/Axios
๐ณ๐ฌ Nigeria is blaming Binance for crashing its currency. (Wall Street Journal)
๐ช๐บ The European Parliament voted to approve new sanctions rules that would apply to crypto. (CoinDesk)
๐ฉ Kickstarter's ill-fated pivot to an also-ran blockchain. (Fortune)
๐ 5. Culture hash: A zine
Dave Nadig's zine. Photo: Crystal Kim/Axios
When I signed up for a newsletter called Echo Beach by ETF veteran and "free agent financial futurist" Dave Nadig I looked forward to getting kernels of wisdom in my inbox (just like you get from us!), Crystal writes.
- ๐ฌ To my surprise, a lime-colored zine called "85bb65" arrived in my actual mailbox peppered with thoughts about AI, the future of western democratic capitalism, QR codes to research, and a Spotify playlist.
Fun fact: 85bb65 is the HTML code for dollar-bill green.
Zoom in: The zine's "investment marketing AI" made me lol and reminded me of how dumb and generative Wall Street copy can be.
- Six dice rolls later, here's my investment ad-libbed copy for the next BIG thing: Our new DeFi protocol...promises to generate income... by leveraging proprietary data... while seeking capital appreciation. We believe it will stack Benjamins for us.
๐ญ Crystal's thought bubble: Crypto's obsession with ETFs... tracks.
This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.
Thanks to Carolyn, our copy editor, who has been a great champion of this newsletter since the beginning and prevented many many mistakes and confusing phrases. โC & B (and Pete)
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Brady Dale covers crypto and blockchain impacts on markets and regulation.



