January 11, 2024
By Sharan Kaur Phillora
On Wednesday, the U.S. Securities and Exchange Commission (SEC) decided to approve rule changes that open the door for creating bitcoin exchange-traded funds (ETFs) in the United States. This move, long-awaited by many, grants regular investors a regulated pathway to access cryptocurrency’s often volatile and controversial world.
Here’s what we know:
As a result of this decision, the Grayscale Bitcoin Trust, which holds about $29 billion of cryptocurrency, is likely to be converted into an ETF. Furthermore, this paves the way for the introduction of similar funds by major issuers like BlackRock’s iShares and Fidelity, with the first funds expected to begin trading as soon as Thursday.
The approval marks a significant milestone in mainstream finance’s adoption of cryptocurrency. The ETF structure offers a regulated and familiar option for institutions and financial advisors to invest in Bitcoin. Cathie Wood, CEO of Ark Invest, commented on the development: “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.”
The SEC’s move represents a shift from its previously cautious stance on crypto, especially under Chair Gary Gensler’s leadership. However, Gensler clarified that this decision is limited to ETFs holding bitcoin and does not indicate a broader endorsement of crypto asset securities. “Importantly, today’s Commission action is cabined to ETFs holding one non-security commodity, bitcoin. It should not signal the Commission’s willingness to approve listing standards for crypto asset securities,” Gensler stated.
This approval has stimulated a competitive atmosphere among financial firms, with more than ten firms in the process of launching their own Bitcoin ETFs. The expectation is a market featuring diverse expense ratios and intensive marketing campaigns.
The anticipation of bitcoin ETFs has also positively influenced bitcoin’s price in recent months, signaling growing investor confidence.
Following a year of intense scrutiny and legal actions against crypto firms, this SEC approval marks a turning point for cryptocurrency, offering a regulated investment avenue to a broader range of investors and solidifying its position in the mainstream financial landscape.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
