NEW YORK (Diya TV) — In a groundbreaking move for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) gave the green light on Wednesday to the first U.S.-listed exchange-traded funds (ETFs) tracking bitcoin. The approval includes applications from major players such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, marking a significant milestone for both the world’s largest cryptocurrency and the broader crypto market.
Expected to commence trading on Thursday, these ETFs are a game-changer for bitcoin, allowing investors to gain exposure to the digital asset without direct ownership. Despite concerns raised by some officials and investor advocates about associated risks, the SEC’s move is seen as a positive step towards institutionalizing bitcoin as a legitimate asset class.
The long-awaited ETFs could potentially draw substantial investments, with Standard Chartered analysts predicting inflows ranging from $50 billion to $100 billion this year alone. Bitcoin’s market capitalization, standing at over $913 billion, underscores the massive potential of these ETFs in the context of the broader U.S. ETF market, with total net assets reaching $6.5 trillion as of December 2022.
The approval has spurred a surge in bitcoin’s value, reaching $47,300, a 3% increase. The cryptocurrency has experienced a more than 70% surge in recent months, driven by anticipation of an ETF and achieving its highest level since March 2022.
The battle for market share among ETF issuers is expected to hinge on factors such as fees and liquidity. Analysts emphasize the crucial role these factors will play in attracting short-term speculators. Some issuers, including BlackRock and Ark/21Shares, have adjusted their proposed fees in response to market dynamics, ranging from 0.2% to 1.5%, with fee waivers offered by many firms for a specified period.
Issuers are gearing up for intense competition, with online advertising and marketing campaigns set to flood the market. Bitwise and VanEck have already released advertisements promoting bitcoin as a compelling investment option.
The SEC’s approval comes on the heels of an unauthorized post on social media falsely claiming approval for the ETFs, which the agency promptly disavowed. The incident is currently under investigation by law enforcement and the SEC’s internal watchdog.
While celebrating the historic moment, regulatory experts anticipate broader implications, suggesting that bitcoin ETFs could pave the way for other innovative crypto products. This move reflects a significant U-turn for the SEC, which had previously rejected bitcoin ETFs due to concerns about potential manipulation.
SEC Chair Gary Gensler, a known crypto skeptic, joined two Republican commissioners in approving the products, emphasizing the agency’s commitment to acting within the law. Gensler reiterated bitcoin’s speculative and volatile nature but stated that the approval should not be interpreted as a signal of easing regulatory scrutiny on crypto players violating securities laws.
Coinbase, the largest U.S. crypto exchange, will serve as the custodian for a majority of the approved ETFs, ensuring secure storage of underlying bitcoin assets. Coinbase CFO Alesia Haas expressed optimism about the approval, emphasizing the long journey ahead for crypto’s broader acceptance.
In the evolving landscape of crypto investments, the SEC’s move towards embracing bitcoin ETFs marks a pivotal moment, with implications for both investors and the regulatory framework surrounding digital assets.
