The US regulator has approved exchange-traded funds (RTFs) that invest directly in Bitcoin. Experts consider it a historic move in the American financial market that will expand access to the largest cryptocurrency on Wall Street and beyond. A green light marks a U-turn for the Securities and Exchange Commission (SEC), which for a decade rejected bitcoin ETFs over fears they could be easily manipulated.
The US SEC approved 11 applications, including those from BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck, among others, according to a notice on its website. Some products are expected to begin shipping on Thursday.
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The move could be a game-changer for bitcoin, experts say, offering institutional and retail investors exposure to the world's largest cryptocurrency without directly owning it, and a big boost for a crypto industry beset by a series of scandals.
What are bitcoin spot ETFs and why are they driving up bitcoin prices?
According to analysts at Standard Chartered, ETFs could attract between $50 billion and $100 billion this year alone, which could push the price of Bitcoin up to $100,000.
Bitcoin was last up 3% at $47,300. The cryptocurrency has soared more than 70% in recent months on anticipation of an ETF, and hit its highest level since March 2022 earlier in the week.
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The landmark decision comes after Grayscale Investments scored a key victory over the SEC. A federal appeals court had overturned the rejection of Grayscale's request to convert its Bitcoin trust into an ETF. The court called the denial “arbitrary and capricious” because the commission did not explain its different treatment of similar products. ETFs holding Bitcoin futures were approved in 2021.
The SEC's loss to Grayscale was one of the reasons the SEC approved the applications, Chairman Gary Gensler said.
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“Based on these circumstances and those discussed more fully in the approval order, I believe the most sustainable path forward is to approve the listing and trading of these Bitcoin ETP spot shares,” Gensler said.
Cryptocurrency advocates have argued for years that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and help bring the industry closer to the more regulated world of traditional finance.
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Posted: Jan 11, 2024, 06:33 am IST
