Approved: US SEC Greenlight Spot Bitcoin ETFs, Blackrock Next?

Estimated read time 3 min read
  • The U.S. SEC’s approval of the first Bitcoin ETFs signals a transformative moment for the cryptocurrency market, allowing investors exposure without direct ownership.
  • The decision follows a decade of anticipation, with major players such as BlackRock and Fidelity among the 11 approved applications, despite some warnings about associated risks.

The U.S. Securities and Exchange Commission (SEC) has ushered in a new era for the cryptocurrency market by approving the first U.S.-listed exchange-traded funds (ETFs) to track bitcoin. This groundbreaking decision, announced on January 10, represents a pivotal moment for the crypto industry, offering a significant leap forward in the institutionalization of Bitcoin as an asset class.

Bitcoin ETFs: A Game-Changer for the Crypto Industry

After a decade in the making, 11 applications were approved, including those from industry giants BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Despite warnings about potential risks, these ETFs are poised to hit the market, initiating fierce competition for market share.

Investors can now gain exposure to the world’s largest cryptocurrency without directly holding it, marking a significant departure from traditional investment approaches. Standard Chartered analysts predict that the ETFs could attract between $50 billion and $100 billion in 2024 alone, with the total net assets of U.S. ETFs standing at $6.5 trillion as of December 2022.

Battle for Inflows: Fees and Liquidity in Focus

The success of these ETFs in attracting investments hinges on factors such as fees and liquidity. Analysts emphasize the importance of competitive fee structures and sufficient liquidity for short-term speculators. Some issuers have already adjusted their proposed fees, with a range from 0.2% to 1.5%, while others opt to waive fees for a specific period.

As the ETFs enter the market, companies are gearing up for a flurry of online advertising and marketing efforts. Bitwise, VanEck, and others have released ads promoting Bitcoin as a compelling investment opportunity.

A Day of Drama and Celebration

The SEC’s approval came amidst a series of unexpected events, including a fake post on social media falsely claiming the SEC had approved the ETFs. Despite the confusion, the crypto industry remains jubilant, seeing this development as a milestone.

Douglas Yones, head of exchange-traded products at the New York Stock Exchange, labeled the approval as a “milestone” for the entire ETF industry, while Cynthia Lo Bessette, head of digital asset management at Fidelity, sees it as providing “increased choice for investors who want to engage with” crypto.

Regulatory Landscape and Future Outlook

Regulatory experts speculate that the approval of bitcoin ETFs could pave the way for innovative crypto products. With several issuers filing for ETFs tracking other cryptocurrencies, this move might signal a shift in the SEC’s stance towards crypto-related financial products.

The SEC’s approval marks a significant reversal, considering the regulator’s historical skepticism towards bitcoin. SEC Chair Gary Gensler, a known crypto skeptic, surprisingly joined two Republican commissioners in approving the products. Gensler reiterated his view that bitcoin is a “speculative, volatile asset” and maintained the SEC’s commitment to cracking down on crypto players violating its laws.

A Historic Mistake?

Not everyone is cheering the SEC’s decision. Dennis Kelleher, CEO of investor advocacy think tank Better Markets, warned that approving bitcoin ETFs was a “historic mistake” and emphasized the vulnerability of bitcoin to fraud. Despite the controversy, the green light for bitcoin ETFs has undoubtedly set the stage for a new chapter in the evolving relationship between traditional finance and the crypto revolution.

You May Also Like

More From Author

+ There are no comments

Add yours