SEC’s Approval of Bitcoin ETFs Marks Pivotal Moment in Crypto Evolution

The US Securities and Exchange Commission (SEC) has given the green light to the first-ever US-listed exchange-traded funds (ETFs) to track bitcoin, according to statements made by SEC Chair Gary Gensler on Wednesday. 

This development marks a significant milestone for the world’s largest cryptocurrency and the broader crypto industry.

The regulatory body approved a total of 11 applications, including submissions from prominent entities such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, as outlined in an official notice on the SEC’s website. 

The approval sets the stage for a fierce competition for market share among these financial institutions, with some of the ETFs expected to commence trading as early as Thursday.

These groundbreaking financial products, a decade in the making, represent a game-changer for bitcoin. 

They enable institutional and retail investors to gain exposure to the cryptocurrency without the need to directly hold it, providing a significant boost for an industry that has faced challenges from various scandals in recent years.

Standard Chartered analysts predict that the approved ETFs could attract a staggering $50 billion to $100 billion in capital this year alone, potentially propelling the price of bitcoin to as high as $100,000. 

Alternative estimates from other analysts suggest inflows could reach approximately $55 billion over the next five years.

Andrew Bond, Managing Director and Senior Fintech Analyst at Rosenblatt Securities, views the SEC’s approval as a “huge positive for the institutionalization of bitcoin as an asset class,” asserting that the move will further legitimize the cryptocurrency in the eyes of institutional investors.

As of the latest data, bitcoin has experienced a 3% increase, reaching $47,300. The cryptocurrency’s value has surged over 70% in recent months, driven by anticipation of the ETF approval and reaching its highest level since March 2022 earlier this week.

Analysts anticipate that success in the upcoming battle for assets among spot bitcoin ETFs will hinge on factors such as fees and liquidity.

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SEC Approves Bitcoin ETFs

The US Securities and Exchange Commission (SEC) has given the green light to the first-ever US-listed exchange-traded funds (ETFs) to track bitcoin, according to statements made by SEC Chair Gary Gensler on Wednesday.

Some issuers have already taken steps to undercut their own fees in new filings this week, emphasizing the urgency to secure a share of the expected capital inflow.

Liquidity is crucial for short-term speculators. The more liquid an ETF is, the easier it becomes for investors to quickly buy and redeem shares at prices closely tracking the actual bitcoin price.

The SEC’s decision represents a notable shift in its stance over the past decade, during which it consistently rejected bitcoin ETF proposals due to concerns about potential market manipulation. 

SEC Chair Gensler, a well-known crypto skeptic, acknowledged the change in approach, citing a recent court ruling that prompted a re-examination of the agency’s position.

Industry experts believe that the approval of bitcoin ETFs could pave the way for innovative crypto products. 

An associate professor at Georgetown’s McDonough School of Business, Jim Angel, suggests that once the regulatory dam has been breached, the SEC will face challenges in maintaining a negative stance on crypto.

The news has been widely celebrated within the crypto industry, with Michael Sonnenshein, CEO of Grayscale, expressing excitement about the prospect of democratizing access to bitcoin through a US-regulated investment vehicle. 

Head of Exchange Traded Products at the New York Stock Exchange, Douglas Yones, considers the approval a crucial milestone for the ETF industry.

Despite the positive development, the SEC faced a brief period of confusion on Wednesday. An unauthorized person posted a fake announcement on the SEC’s social media account, falsely claiming approval for the new products. 

The agency swiftly disavowed and deleted the post, revealing ongoing coordination with law enforcement agencies for a thorough investigation into the incident.

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