A spot bitcoin ETF is a fund that tracks the price of bitcoin (BTC) in the spot market, where cryptocurrencies are bought and sold for immediate delivery. Instead of investors needing to buy and secure their own bitcoin, they can buy shares of the ETF which represent ownership of a portion of the fund’s bitcoin holdings.

Since 2013, there have been more than a dozen spot bitcoin ETF applications by companies like ARK and BlackRock. The first spot bitcoin ETF was filed by our founders, Cameron and Tyler Winkelvoss, in 2013. 

Spot bitcoin ETFs must be approved by the U.S. Securities and Exchange Commission (SEC). The first spot bitcoin ETFs were approved on January 10, 2024.

A spot ETF is an investment fund that holds a portfolio of assets and can be bought and sold on an exchange throughout the trading day at the current market price. A futures ETF is also an investment fund that holds a portfolio of assets, but instead of buying the assets directly, it invests in futures contracts. 

Spot ETFs generally have lower volatility compared to futures ETFs. This is because spot ETFs hold the actual assets, and their value tends to move in line with the performance of those assets. Futures ETFs, on the other hand, can be more volatile due to the leverage and margin considerations involved in trading futures contracts and the potential for price fluctuations in these contracts.

It's important to note that both spot and futures ETFs have their own advantages and considerations, and it's important for investors to carefully evaluate their investment goals and risk tolerance before choosing between them.

In October 2021 the SEC approved the first Bitcoin futures ETF, ProShares Bitcoin Strategy ETF. However, this was not a spot Bitcoin ETF, as it tracked Bitcoin futures contracts rather than the spot price of Bitcoin.

There are many ways a spot bitcoin ETF may impact bitcoin and the broader digital assets industry. 

1. Authorized Participants – These are the organizations responsible for acquiring the underlying asset an ETF wants to hold.  Traditionally, large banks have served in this role.  However, it's well documented they remain on the sidelines of the digital asset industry.  Others, such as market makers, have risen up in their place. The question remains whether banks will continue to sit out or join the digital asset ecosystem.

2. Exchanges – The authorized participants mentioned above will look to regulated digital asset exchanges like Gemini to procure bitcoin.

3. Custodians – Because the ETFs need to hold bitcoin directly, and the complexities and risks around key management, the ETFs will most likely look to qualified custodians like Gemini to perform this service for them.  

As we’ve seen in previous crypto bull runs, a rising tide lifts all boats and the correlation between bitcoin and the broader global digital asset industry is well known. Altcoins, Defi, and Web3 assets, as well as companies in the digital asset industry may accelerate commercially as well with the approval of an ETF.  

But maybe more than any of the above, the approval of a spot bitcoin ETF by the most revered financial regulatory organization in the world is a final stamp on a 14-year journey since the issuance of the whitepaper. Bitcoin is real and it’s here to stay.

On Wednesday, January 10, 2024, the SEC approved the first spot bitcoin ETFs for launch in the US, a notable milestone in the history of crypto. They approved 11 separate spot bitcoin ETFs for trading. 

While bitcoin ETFs have been the main topic of conversation over the past year, applications for spot ether ETFs have also been filed with the SEC, but have yet to be approved.