In a momentous decision, the U.S. Securities and Exchange Commission (SEC) has granted approval for the establishment of bitcoin exchange-traded funds (ETFs) in the United States. This eagerly awaited development signifies a substantial stride towards providing the general public with entry into the unpredictable realm of cryptocurrency.
This verdict is anticipated to trigger the transformation of the Grayscale Bitcoin Trust, holding an estimated $29 billion in cryptocurrency, into an ETF. Additionally, major issuers such as BlackRock’s iShares and Fidelity are gearing up to introduce rival funds, with the inaugural ETFs scheduled to commence trading on Thursday.
The approval holds the potential to be a pivotal moment in the mainstream acceptance of cryptocurrency within the financial landscape. The ETF framework offers a familiar and regulated avenue for institutions and financial advisors to gain exposure to bitcoin, potentially paving the way for broader acceptance.
Cathie Wood, CEO of Ark Invest, expressed her views on the SEC’s decision, stating, “We think that the SEC approval, should we and others get it, is a green light for institutions. We’ve been talking to quite a few of them, and they’re much more interested now that the SEC effectively is paving the way.” Ark Invest has collaborated with 21Shares on a proposed bitcoin fund.
The SEC’s decision follows an incident where an official SEC social media account falsely claimed on Tuesday that bitcoin ETFs had been approved. The SEC clarified that the account had been compromised.
For years, the SEC resisted the concept of a spot bitcoin fund, with several firms previously filing and withdrawing applications for ETFs. Gary Gensler, the SEC Chair known for his skeptical stance on crypto, seemed to shift regulatory course in 2023. This shift may have been influenced, in part, by a court decision in August, criticizing the SEC for obstructing bitcoin ETFs while permitting funds tracking bitcoin futures.
Gensler clarified the SEC’s stance on the approval, stating, “Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, bitcoin.” He emphasized that this approval does not signal the SEC’s willingness to approve listing standards for crypto asset securities or indicate their views on the status of other crypto assets under federal securities laws.
Optimism around the approval of bitcoin ETFs resurfaced when BlackRock filed an application in June, leading to a subsequent influx of applications from competitors. The partnership between Ark Invest and 21Shares, with the longest active filing, prompted industry experts to expect approvals shortly after the beginning of 2024, especially given the SEC’s deadline in January.
Over 10 firms are now in the formal process toward launching bitcoin ETFs, setting the stage for fierce competition. The approval could be a game-changer for the market, introducing varying expense ratios and intense marketing strategies. Some firms have already revised down their proposed fees.
While not guaranteed, several bitcoin ETFs are slated to begin trading on the Cboe BZX exchange on Thursday, as indicated on the Cboe website. The anticipation of ETFs has also contributed to a surge in bitcoin prices in recent months, with some believing that these funds will attract new demand from investors who were previously deterred by concerns about custody and the safety of crypto-specific exchanges.
This milestone approval comes amid a year marked by significant law enforcement actions against crypto firms and industry leaders, including the conviction of FTX founder Sam Bankman-Fried and multiple regulatory actions against Binance and its founder Changpeng Zhao.
