SEC Grants Approval to Bitcoin ETFs, Facilitating Greater Accessibility to Leading Cryptocurrency

SEC Grants Approval to Bitcoin ETFs, Facilitating Greater Accessibility to Leading Cryptocurrency

10th Jan, 2024

The asset management industry's decade-long pursuit of launching a spot Bitcoin ETF has reached a milestone, with U.S. regulators approving Bitcoin ETFs. This move significantly broadens access to the 15-year-old cryptocurrency. The Securities and Exchange Commission (SEC) granted approval to 19b-4 filings from the New York Stock Exchange, Nasdaq, and Cboe Global Markets, allowing these markets to list and offer trading in the securities.

Approximately a dozen companies, including BlackRock, Fidelity, and Grayscale, have sought to create Bitcoin ETFs. The recent approval has sparked intense competition among them, leading to announcements and adjustments in the fees they plan to charge investors. Notably, these are spot ETFs, holding actual Bitcoin, in contrast to previously approved Bitcoin futures ETFs, which involve derivatives contracts tied to BTC.

The SEC's approval follows years of delays and rejections of attempts to launch spot Bitcoin ETFs. The decision also comes after a court ruling in August, where the SEC faced criticism for rejecting Grayscale's attempt to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF.

SEC Chair Gary Gensler cited the court loss in 2023 as a factor in approving the spot Bitcoin ETFs. Advocates argue that regulated trading products focused on Bitcoin will provide institutional and retail investors with exposure to Bitcoin's price movements without the need for direct investment in the digital asset.

SEC Commissioner Hester Peirce celebrated the approval, emphasizing the right of American investors to express their thoughts on Bitcoin through spot Bitcoin ETPs. However, Commissioner Caroline Crenshaw dissented, expressing concerns about fraud and manipulation in the Bitcoin spot market.

The approval process, marked by numerous meetings and amendments, gained momentum in 2023. The final submissions from NYSE Arca, Cboe BZX, and Nasdaq aligned with amended filings from ETF issuers. Brokerages like Fidelity and E-Trade began adding tickers tied to these ETFs to their platforms.

The optimism around spot ETFs contributed to a significant increase in Bitcoin prices, rising from around $27,000 on October 1 to over $45,000 at the beginning of 2024. The Grayscale Bitcoin Trust (GBTC) saw a surge in its shares, reaching $40, its highest since December 2021.

The approval marks a monumental day in the history of digital assets, according to Hashdex Chief Investment Officer Samir Kerbage. Despite a brief moment of confusion with a deleted order, the SEC's approval underscores the evolving landscape of cryptocurrency investments.


Felix @mecnix

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