Crypto News U.S. Securities and Exchange Commission (SEC) has granted approval for the first U.S.-listed exchange-traded funds (ETFs) tracking bitcoin, marking a pivotal moment for the world’s largest cryptocurrency and the broader crypto industry.
The regulatory nod includes 11 applications from notable entities such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Despite some warnings from officials and investor advocates about potential risks associated with these products, the SEC’s approval signals a transformative development for bitcoin. The ETFs, a decade in the making, provide investors with exposure to bitcoin’s value without the need to directly hold the cryptocurrency. This move is seen as a significant step towards institutionalizing bitcoin as an asset class.
The SEC’s approval encompasses 11 applications from prominent entities, including BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Despite concerns raised by some officials and investor advocates regarding potential risks associated with these products, the regulatory green light signals a transformative development for bitcoin. The ETFs, a decade in the making, enable investors to gain exposure to bitcoin’s value without the need to directly hold the cryptocurrency. This move is seen as a significant step toward institutionalizing bitcoin as an asset class.
The approved ETFs are expected to commence trading shortly, sparking intense competition among issuers for market share. Analysts predict that these ETFs could attract substantial inflows, with estimates ranging from $50 billion to $100 billion in 2024 alone. While the cryptocurrency market capitalization exceeds $913 billion, bitcoin’s recent surge, driven by anticipation of ETF approval, has propelled it to over $47,000.
Success in attracting investments is anticipated to hinge on factors such as fees and liquidity. Some issuers have adjusted their proposed fees, ranging from 0.2% to 1.5%, with potential fee waivers for a specified period. Liquidity, particularly for short-term speculators, is also expected to play a crucial role.
The approved ETFs are expected to commence trading shortly, leading to intense competition among issuers for market share. Analysts predict that these ETFs could attract substantial inflows, with estimates ranging from $50 billion to $100 billion in 2024 alone. While the cryptocurrency market capitalization exceeds $913 billion, bitcoin’s recent surge, driven by anticipation of ETF approval, has propelled it to over $47,000.
The competition is likely to prompt an influx of online advertising and marketing efforts by issuers. The simultaneous launch of multiple similar ETFs on the same day is unprecedented, leading to uncertainties about their reception and performance.
The SEC’s approval comes amid an incident where an unauthorized individual posted a fake announcement on the SEC’s social media account regarding ETF approval. The agency disavowed the post and is investigating the matter in collaboration with law enforcement and its internal watchdog.
Despite these events, the crypto industry is celebrating the regulatory green light, considering it a milestone for the ETF industry and a positive step toward wider adoption of crypto assets. This move could also pave the way for innovative crypto products beyond bitcoin.
While some regulatory experts believe the SEC’s approval of bitcoin ETFs may lead to a more receptive stance on crypto, Chairman Gary Gensler reiterated his skepticism about bitcoin, calling it a “speculative, volatile asset” often used for illicit purposes. The approval, therefore, does not indicate a relaxation of the SEC’s regulatory scrutiny on crypto-related activities.
The SEC’s decision, made possible by a federal appeals court ruling, showcases a reversal of its previous concerns about potential manipulation of bitcoin ETFs. Notably, SEC Chair Gary Gensler, a known crypto skeptic, voted alongside the SEC’s Republican commissioners in favor of approval, highlighting the regulatory body’s divided stance on the matter.
Investors are now eagerly watching how the introduction of bitcoin ETFs will shape the crypto landscape and whether this development will encourage additional regulatory approvals for innovative crypto investment products.