Which TradFi giant could jump into the bitcoin ETF race next?

After Franklin Templeton became the latest large traditional finance firm to file for a spot bitcoin ETF, industry watchers await who could be the next big company to throw its hat in the ring.

Several market observers have named fund giants Schwab Asset Management and State Street Global Advisors as those who could soon follow, though the firms aren’t letting on.

BlackRock, a fund group managing $9.4 trillion in assets as of June 30, applied for a spot bitcoin fund in June. Fellow financial titans Fidelity and Invesco re-filed for their own planned spot bitcoin ETFs later that month.

Franklin Templeton’s filing signals there are even more large companies to follow, according to Ric Edelman, founder of Edelman Financial Engines and the Digital Assets Council of Financial Professionals.

“This will be a snowball effect; every fund sponsor will have no choice but to offer a spot bitcoin ETF,” he told Blockworks. “Even those that don’t agree with the investment premise will recognize that they are losing [assets under management], and in some cases even clients, to competitors that do offer these products.”

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So, who’s next?

Nate Geraci, president of The ETF Store, said in an X post in June that Schwab Asset Management was a “dark horse” candidate to pursue a spot bitcoin ETF.

David Botset, head of equity product management and innovation at Schwab Asset Management, told Blockworks in January 2022 that the company was evaluating “opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF.”

The firm launched the Schwab Crypto Thematic ETF (STCE) last year. Investing in crypto-related stocks such as Coinbase, MicroStrategy and various bitcoin miners, the fund has about $11 million in assets. Schwab was also among the backers of crypto exchange EDX Markets, which launched in June.

A company spokesperson declined to comment on whether it could pursue a spot bitcoin ETF.

State Street Global Advisors (SSGA) is another candidate for entering the spot bitcoin ETF race, according to CK Zheng, co-founder of crypto hedge fund ZX Squared Capital. The firm’s US ETFs hold nearly $1.1 trillion — the second-largest of which is its SPDR Gold Trust (GLD), which manages $54 billion.

“As we view BTC as a commodity and a digital gold, State Street is in a unique position to expand their SPDR GLD ETF to a SPDR BTC ETF with their expertise and influence,” Zheng told Blockworks.

Bloomberg Intelligence senior analyst Eric Balchunas agrees, noting in a response to Geraci’s June post: “How on Earth do you be the [company with] GLD and not look to add spot bitcoin asap?”

“We continuously evaluate our product lineup and pricing structure in order to offer investors attractive solutions to help them meet their goals,” a State Street spokesperson told Blockworks in an email Monday, declining to comment further.

State Street formally launched a digital finance division in 2021 — a unit whose priorities this year were set to include tokenizing funds and private assets.

But Rory Tobin, head of SSGA’s ETF business, told Financial News in June the firm didn’t have immediate plans to launch crypto products — noting “it’s been hard to come up with an investment case for crypto.”

ProShares runs the largest bitcoin-related ETF in the US — albeit one that holds bitcoin futures instead of BTC directly. Roughly $900 million of its $65 billion in US ETF assets under management reside in its Bitcoin Strategy ETF (BITO).

The firm has not yet applied with the US Securities and Exchange Commission for a spot product. A spokesperson declined to comment.

“If they can bring this success to a spot BTC ETF, they will become a dominant player in this space,” Zheng said.

Remaining on the sidelines

Matthew Sigel, head of digital assets research at prospective bitcoin ETF issuer VanEck, said jumping into the bitcoin ETF race isn’t exactly attractive right now, considering the SEC has blocked every such launch attempt over the last decade.

“Who would possibly want to join the stampede to offer a bitcoin ETF, given that an over-zealous regulator is making the usual process impossible, fees will race to the bottom, and there may be little differentiation among sponsors?” Sigel said.

Though Edelman expects others to look to offer a spot bitcoin ETF, there will be a few exceptions, he said.

“Some fund companies and advisory firms specialize in certain market segments, and they won’t offer crypto funds if those aren’t consistent with their brand,” Edelman said. “But these will be in the minority.”

JPMorgan is “very unlikely” to join the bitcoin ETF race, according to Zheng, given CEO Jamie Dimon’s repeated criticisms of the asset class. Dimon called bitcoin a “hyped-up fraud” in January during an interview with CNBC.

Vanguard, whose US ETFs manage nearly $2.2 trillion, has not signaled any interest in the space to date.

Chief investment officer Greg Davis called crypto “more of a speculative asset class” in May 2022. He added that while the firm finds blockchain technology compelling, crypto “doesn’t fit from an investment perspective.”

JPMorgan and Vanguard did not return requests for comment.

Edelman said there will eventually be widespread availability of spot bitcoin ETFs from most registered investment advisers (RIAs) and brokerage firms. Wirehouses, he added, are likely to be slower to offer a spot bitcoin ETF — whether it’s their own product or ones issued by others.

“They will certainly engage eventually due to demand from both their reps and their clients,” Edelman said. “The barrier to all this is the SEC’s refusal to approve the applications to date. There is widespread optimism that this will soon change.”

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