On Wednesday, the Securities and Exchange Commission approved important applications from markets wanting to introduce these innovative products. Starting Thursday, these ETFs will be available for trading.
For more than ten years, the asset management industry has been working on introducing a regular Bitcoin ETF. There’s optimism that this move will attract more investors to the world of crypto. American regulators have given the green light to bitcoin ETFs, significantly expanding the reach of the 15-year-old cryptocurrency.
After the decision, the price of Bitcoin surged past $47,500. This positive movement also sparked rallies in other cryptocurrencies.
Bitcoin ETF Approvals and Industry Competition: A New Era Unfolds
About a dozen major companies, including BlackRock, Fidelity, and Grayscale, have been vying to launch bitcoin (BTC) ETFs. In recent days, these companies have not only announced but also, in some cases, adjusted the fees they plan to charge investors. This signals an upcoming intense competition to attract investors’ funds. Notably, these ETFs are of the spot variety, holding actual bitcoins, as opposed to the previously approved bitcoin futures ETFs that deal with derivative contracts related to BTC.
The recent approval from the U.S. Securities and Exchange Commission (SEC) marks a significant milestone, given the numerous delays and rejections faced by similar attempts over the years. The decision also follows a notable court ruling in August, where the D.C. Circuit Court of Appeals criticized the SEC’s rejection of Grayscale’s bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF, deeming it “arbitrary and capricious.”
SEC Chair Gary Gensler, in a statement, acknowledged the 2023 court loss as a factor influencing the approval of the approximately dozen filings on Wednesday. The combination of industry competition and legal developments is shaping a new era for Bitcoin ETFs, with potential implications for the broader cryptocurrency market.
SEC Court Decision and Differing Perspectives on Spot Bitcoin ETFs
The U.S. Court of Appeals for the District of Columbia recently overturned the SEC’s decision to disapprove the listing and trading of Grayscale’s proposed Exchange Traded Product (ETP). The court highlighted the Commission’s failure to adequately explain its reasoning, leading to the vacating of the order and remanding the matter back to the SEC. In response, SEC officials are considering the approval of spot bitcoin ETP shares based on the circumstances and discussions outlined in the approval order.
Advocates for a spot bitcoin ETF have long contended that having a regulated trading product centered on the oldest cryptocurrency would provide both institutional and retail clients with exposure to bitcoin’s price movements without the need for setting up wallets or directly investing in digital assets. ETF shares, in this context, would be accessible to any U.S. investor with a brokerage account.
SEC Commissioner Hester Peirce, a proponent of the digital asset industry, expressed her support for the approval, emphasizing that the rationale behind the regulator’s past rejections for spot bitcoin ETF filings was “perplexing.” She sees this moment as a time for both reflection and celebration, emphasizing the importance of American investors having the right to express their thoughts on bitcoin through buying and selling spot bitcoin ETPs.
However, not all SEC commissioners share the same view. Commissioner Caroline Crenshaw dissented from the approval order, citing “substantial evidence” indicating potential fraud or manipulation in the bitcoin spot market. She argued that the spot and futures markets are distinct, disagreeing with the 2023 court judgment that contributed to the approval decision. Crenshaw expressed skepticism about relying on the transparency of the futures market to detect fraud or manipulation in the underlying spot market, raising concerns about the overall safety of the spot bitcoin market.
Anticipation and Approvals: SEC Nears Greenlight for Spot Bitcoin ETFs
Throughout the latter part of 2023, the approval of a spot Bitcoin ETF by the SEC appeared increasingly likely. A series of meetings between the regulatory agency and the proposed ETF issuers, coupled with multiple amendments to the applicants’ ETF S-1 filings, created an impression of meticulous preparation leading up to the launch. Notable players like NYSE Arca, Cboe BZX, and Nasdaq finalized their 19b-4 submissions, aligning them more closely with the amended S-1 filings from prospective ETF issuers such as Galaxy/Invesco, Ark, and Franklin Templeton.
Towards the end of last week, NYSE Arca, Cboe BZX, and Nasdaq submitted their final 19b-4 documents, aligning them with the amended S-1 filings of ETF issuers like Galaxy/Invesco, Ark, and Franklin Templeton. Simultaneously, brokerages like Fidelity and E-Trade began incorporating tickers linked to these ETFs into their platforms.
As optimism swelled regarding the imminent approval of spot ETFs, the price of Bitcoin experienced a notable surge, escalating from around $27,000 on October 1 to surpassing $45,000 at the beginning of 2024.
In a seemingly confirmatory statement, Grayscale’s Vice President for Communications, Jenn Rosenthal, announced the necessary regulatory approvals to uplist GBTC to NYSE Arca. Meanwhile, Hashdex Chief Investment Officer Samir Kerbage characterized the developments as a “monumental day in the history of digital assets.”
However, a twist emerged as the SEC initially published, then seemingly deleted, an order approving the U.S.’s first spot Bitcoin ETFs on Wednesday. This unexpected turn of events adds an element of uncertainty to the otherwise positive trajectory, leaving stakeholders eagerly awaiting further clarification from the regulatory body.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
Join Cryptos Headlines Community
Follow Cryptos Headlines on Google News
