The Securities and Exchange Commission (SEC) has made a groundbreaking move by giving the green light to several spot bitcoin exchange-traded funds (ETFs). This decision, announced on Wednesday, paves the way for a new class of investors to enter the virtual currency market. It is expected to have a positive impact on the price of bitcoin, which was mostly flat at around $46,278 following the SEC’s news.
Approved Bitcoin ETFs
The following ETFs have been approved:
- Grayscale Bitcoin Trust GBTC
- Bitwise Bitcoin ETF
- Hashdex Bitcoin ETF
- Blackrock’s iShares Bitcoin Trust
- Valkyrie Bitcoin Fund
- ARK 21Shares Bitcoin ETF
- Invesco Galaxy Bitcoin ETF
- VanEck Bitcoin Trust
- WisdomTree Bitcoin Fund
- Fidelity Wise Origin Bitcoin Fund
- Franklin Bitcoin ETF
Overcoming Regulatory Hurdles
This approval comes after years of unsuccessful attempts by ETF sponsors to list a spot bitcoin product. Previous applications were rejected by regulators who cited concerns over the unregulated nature of bitcoin markets and the potential for market manipulation. However, with this recent development, average investors can now enjoy protection from fraud.
Anticipation and Misinformation
The crypto community was eagerly anticipating this approval announcement, especially since the SEC had a Wednesday deadline to make a decision. There was a momentary surge in bitcoin prices on Tuesday when a false tweet, claiming that the regulator had already approved the products, was posted on the SEC’s Twitter account. However, this misinformation did not deter the eventual approval of bitcoin ETFs.
Removing Barriers for Investors
With the approval of these bitcoin ETFs, a major obstacle in bitcoin investment has been eliminated – self-custody of the coins. Institutional and retail investors can now invest in bitcoin without the need for personal blockchain wallets. Will McDonough, founder and chairman of Corestone Capital, believes that this development will create new opportunities for investors in the digital asset market.
Significant Potential for Increased Investment in Digital Assets
Austin Reid, global head of business at FalconX, believes that the approval of bitcoin Exchange Traded Funds (ETFs) could open up new opportunities for investment and financial advisors. Allocating capital to digital assets could become a more popular recommendation among advisors. Reid states that this could bring about a surge of capital flowing into the asset class.
Advisors Delaying Bitcoin Purchases Until ETF Approval
A recent survey conducted by Bitwise Asset Management and VettaFi reveals that approximately 88% of interested advisors are waiting for the approval of spot bitcoin ETFs before considering purchasing bitcoin.
Federal Judge Challenges SEC’s Denial of Bitcoin ETF
Last August, a federal judge criticized the Security and Exchange Commission (SEC) for denying Grayscale Investments’ application to list a bitcoin ETF. The judge deemed the denial “arbitrary and capricious” and in violation of federal administrative law.
The judge argued that since the SEC had already approved two bitcoin futures funds, disapproving a bitcoin spot ETF was inconsistent with the principle that agencies “must treat like cases alike.” This is because prices in the bitcoin futures market closely align with those in the spot market.
Expectations for Approval Grow Following Judge’s Ruling
With the federal judge’s ruling, it is widely expected that the SEC will eventually approve a spot ETF for bitcoin. Previously, the SEC had expressed concerns about the lack of surveillance and potential fraud in bitcoin spot markets, while futures markets had stronger oversight due to the involvement of registered futures exchanges.
Future Outlook: ETFs for Other Digital Assets
Industry participants now eagerly await the SEC’s decision on ETFs based on other digital assets. However, experts such as McDonough anticipate that the process may take longer for ETFs investing in smaller coins like ether.
SEC Chair Gary Gensler has publicly stated that he considers bitcoin to be a commodity rather than a security, indicating his preference for this particular cryptocurrency.
As the crypto market continues to evolve, the approval of bitcoin ETFs could mark a major turning point in the accessibility and acceptance of digital assets. Both investors and financial advisors will keep a close eye on the SEC’s decisions in the coming months.