Canada’s Significant Contribution
Canada has emerged as a prominent player in this space, with nearly $2 billion of the global assets invested in seven spot bitcoin ETFs launched in the country since 2021. The Purpose Bitcoin ETF, based in Canada, leads the pack with $819.1 million in assets, making it the largest among the 20 ETFs in this category.
While the United States has thus far approved only futures-based Bitcoin ETFs like ProShares Bitcoin Strategy, boasting about $1.2 billion in assets, the country’s regulators are reviewing up to ten applications for spot-based ETFs.
Debate Over ETF Types
Advocates of spot-based ETFs argue that futures-based alternatives are an imprecise and more costly method of tracking bitcoin’s performance within an exchange-traded product. However, the SEC has denied all spot bitcoin ETF applications, citing concerns about the protection of investors from potential market manipulation.
Other regulatory regimes have been more welcoming. Germany’s ETC Group Physical Bitcoin ETF, launched in June 2020, now holds $802 million in assets, making it the second-largest globally. Europe hosts seven other spot Bitcoin ETFs, often incorporated in tax havens such as Jersey, the Cayman Islands, and Liechtenstein. Smaller products are also traded in Brazil and Australia.
The potential size of the U.S. spot bitcoin ETF market is a subject of debate, with initial estimates suggesting demand of at least $1 billion on the first day. Whether the forthcoming U.S. spot bitcoin ETFs can outpace their Canadian and German counterparts and attract strong investor interest remains to be seen, as the market dynamics continue to evolve.