January 11, 2024

Huh! I guess the crypto dream isn't dead quite yet. The bitcoin ETFs are live, at last, and the market is on the mend, with bitcoin around $46,000 at press time.

  • On that note, we have something cool to show you this morning. We've been working on this 👇 since December.

📨 What do you think? [email protected]

Today's newsletter is 1,078 words, a 4-minute read.

🍾 1 big thing: Our bitcoin ETF timeline

Illustration: Aïda Amer/Axios

When Cameron and Tyler Winklevoss first proposed making an exchange traded product in 2013, it seemed like a simple idea, Brady and Crystal write.

  • It was not.

Why it matters: From the perspective of bitcoin investors, ETFs that hold actual bitcoins (a "spot" bitcoin ETF) should drive up the price of the oldest cryptocurrency by taking supply off the market, presumably for a long time.

Driving the news: Yesterday, the SEC approved several regulated exchanges to offer such products, and they approved several ETFs to begin trading. This morning, it started.

  • 🦄 And to commemorate the big event, we made something pretty cool:

👉👉👉 The bitcoin ETF saga

Details: This is a visualization that plots the key events going back a decade on the path to yesterday's historic regulatory milestone, showing bitcoin price along the way and quotes from key figures like Barry Silber, Jay Clayton, Hester Peirce and Mr. Money Mustache.

  • We are excited about this multimedia presentation, and we hope you will dig it too. You can see what a long and winding road this has been.

The timeline: Here's what we think some of the major-major events were on the way to U.S. regulators greenlighting these products yesterday.

Days of hope: July 2013. The Winklevoss brothers take the first stab at launching a bitcoin ETF, putting the idea out there. Not long after, Grayscale Bitcoin Trust launches, the next best thing.

  • March 2017. The SEC rejects the brothers' bid. Yes, it took about four years. Foreshadowing, much?
  • December 2017. Two Chicago exchanges offer a bitcoin-futures product, trading on the price without holding bitcoin.
  • February 2021. Canada gives the green light to actual bitcoin ETFs.

Days of rage: April 2021. Gary Gensler takes over from Jay Clayton as the top dog at the SEC.

  • October 2021. The SEC approves an ETF based on bitcoin futures, which is a start but it does nothing to constrain supply.
  • More firms put in applications at this point, trying more sophisticated proposals to persuade regulators, but they get nowhere.
  • Meanwhile, Grayscale, whose GBTC product had traded at a premium, falls into a discount at the end of the year. So, it starts to get feisty.
  • Grayscale starts a public campaign to get the SEC to allow it to convert to an ETF.

Bitcoin's revenge: In June 2022, Grayscale sues the SEC over denying its ETF.

  • June 2023. BlackRock throws its hat in the bitcoin ETF ring.
  • August 2023. Grayscale beats the SEC in court. Not long after, the SEC signals surrender by declining to appeal.

At that point, it was all over but the coping and hacking.

Quick take: The agency's defeat will certainly define chair Gensler's tenure.

The bottom line: Seriously, though, just check this thing out.

🥕 2. Charted: BTC ETF Deals

Data: SEC filings; Table: Axios Visuals
Data: SEC filings; Table: Axios Visuals

The spot bitcoin ETF race to billions has started, Crystal writes.

Between the lines: Eleven ETF shops are vying for customer dollars, under the SEC process that appeared to sidestep a kingmaker role.

  • Of note: Hashdex's DEFI fund is the only one not included in the above chart, with its fee remaining unchanged after its shift in strategy.

State of play: Most issuers have cut fees already, with seven of the 11 offering discounted rates for a set time or until the fund reaches a certain amount of assets.

The bottom line: For investors, it means paying zero for a bitcoin play, at least for the moment.

🔭 3. What happens next?

Illustration: Sarah Grillo/Axios

The easy button has arrived for bitcoin, but pushing other coin ETFs through the SEC may not be any easier than before, Crystal writes.

Zoom in: "People would have a very tough time putting XRP in an ETF," Matt Frankle, co-head of law firm Haynes and Boone's crypto practice, tells Axios.

  • "Duplicating what issuers are doing for BTC for other crypto may be more difficult because the SEC has not taken a stand as to whether different coins are securities."

Quick take: ETH might get an ETF; others, likely dead on arrival.

The big picture: Spot bitcoin ETFs have gotten the nod, but the SEC has yet to offer any regulatory framework specific to crypto.

Zoom in: Until then, ETF shops wouldn't risk "packaging up a coin that could be deemed a security in future enforcement action," Frankle says.

  • Flashback: Open lawsuits against exchanges including Binance, Coinbase, and Kraken came with a list of coins alleged to be securities.

What we're watching: Maybe that will change.

  • "Every time there is a consensus regulatory decision on how to treat digital assets — in this case approval of a securitized bitcoin product — it narrows the set of residual issues to solve, and by definition helps to focus legislative efforts," Paul Grewal, chief legal officer at Coinbase, tells Axios.

The bottom line: "While this is just a small step, it is a very important step, to bringing a comprehensive regulatory framework to digital assets in the U.S." he says.

🏃 4. Catch up quick

Illustration: Natalie Peeples/Axios

🤫 Circle confidentially submitted IPO papers with securities regulators, but no further details are known. (Axios)

🧸 X removed the NFT profile picture PFP launched when the company was known as Twitter. (TechCrunch)

🚔 A victim of SIM swapping who lost $100,000 in assets from his Coinbase account served his alleged attacker with a notice of a lawsuit by dropping it into their bitcoin wallet. (Krebs on Security)

⛏️ A 23-year-old Chinese national paid $6 million in bitcoin for a miner in Texas. (The New York Times)

📈 5. More charted: Price spikes last night

Data: CoinGecko; Chart: Axios Visuals
Data: CoinGecko; Chart: Axios Visuals

Prices spiked yesterday on the ETF news for... Ethereum's coin, ether?

What's happening: The market is likely signaling anticipation of an eventual ETF for the second largest cryptocurrency and a new so-called alt season, Brady writes.

Be smart: When crypto prices are rising, there's always some alt coin rising much faster than bitcoin. Traders who make lots of good guesses about which ones will pop make a lot of money quickly.

  • Ethereum tends to get a lot of play at such times because many popular tokens run on the Ethereum virtual machine.

By the numbers: Bitcoin today broke $47,000, retracing losses back to late 2021.

  • Meanwhile, ether (ETH) is trading around $2,600, retracing losses to May 2022.

The intrigue: The biggest gainer of the top 25 coins over the last 24 hours was ethereum classic (ETC, #24), the old version of Ethereum. As of 9 this morning, it was up over 40%.

  • This is likely because Grayscale, which won the day yesterday, has long had a trust for Ethereum Classic, much like the bitcoin trust that turned into an ETF today.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

Hey! You! Are you still here? Click on this crazy timeline. —C&B