SEC Approves First Spot Bitcoin Exchange Traded Product

Investors looking to invest in Bitcoin can now do so through exchange-traded products (ETPs), as the U.S. Securities and Exchange Commission (SEC) approved the first-ever spot Bitcoin ETP on Wednesday.

This marks the end of a decade-long fight to get these products approved and the beginning of a new era for investors, as it is now possible to invest directly in Bitcoin through ETPs that trade like stocks or ETFs. This is because these ETPs hold Bitcoin as their underlying asset, so investors do not own Bitcoin in these products. However, investors may profit or lose based on price movements of the underlying asset.

Previously, investors could only invest in Bitcoin by purchasing it directly or through funds invested in Bitcoin futures or Bitcoin derivatives.

Eleven funds were approved.

In this first approval, the SEC approved 11 spot Bitcoin ETFs, some of which include BlackRock (NYSE:BLK), ARK Invest, Franklin Resources (NYSE:BEN), and Invesco (NYSE:IVZ). It belonged to a major money manager. , Fidelity Investments.

The 11 Bitcoin ​​ETPs are:

• iShares Bitcoin Trust (NASDAQ:IBIT)
• Grayscale Bitcoin Trust (NYSEARCA:GBTC)
• ARK 21Shares Bitcoin ​​ETF (NYSEAMERICAN:ARKB)
• Bitwise Bitcoin ​​ETP Trust (NYSEAMERICAN:BITB)
• WisdomTree Bitcoin Trust (CBOE:BTCW)
• Fidelity Wise Origin Bitcoin Trust (NYSEAMERICAN:FBTC)
• VanEck Bitcoin Trust (NYSEAMERICAN:HODL)
• Invesco Galaxy Bitcoin ​​ETF (NYSEAMERICAN:BTCO)
• Valkyrie Bitcoin Fund (NASDAQ:BRRR)
• Hashdex Bitcoin ​​ETF (NYSEAMERICAN:DEFI)
• Franklin Bitcoin ​​ETF (CBOE:EZBC).

All of these funds are currently trading on various exchanges.

The SEC voted 3-2 in favor of approval, with Chairman Gary Gensler joined by Hester Peirce and Mark Uyeda. Commissioners Caroline Crenshaw and Jaime Lizárraga voted against it.

Since 2018, the SEC has rejected more than 20 applications for spot Bitcoin ETPs. However, as Gensler explained in a statement, things changed after Grayscale sued the SEC for not approving its 2022 spot bitcoin application and won.

“The District of Columbia Court of Appeals ruled that the Commission failed to adequately explain why it did not approve the listing and trading of Grayscale’s proposed ETP,” Gensler said Wednesday. “Accordingly, the court vacated the grayscale order and remanded the matter to the commission. Based on these circumstances and what was discussed in more detail in the Approval Order, we believe the most sustainable path is to authorize the listing and trading of these spot Bitcoin ETP shares.”

With the approval, Grayscale converted the existing futures-based Grayscale Bitcoin Trust into a spot Bitcoin ETP trading under the same ticker.

Gensler added that this approval does not mean he supports Bitcoin.

“We today approved the listing and trading of certain spot Bitcoin ETP shares, but did not endorse or endorse Bitcoin,” he explained. “Investors should be cautious about the numerous risks associated with Bitcoin and products whose value is tied to cryptocurrencies.”

What this approval means for investors

Wednesday’s historic approval would be a game-changer as it could open the floodgates to new retail and institutional investors and normalize Bitcoin as an asset class. Gensler said Wednesday’s approval is “limited to ETPs that hold one non-secure product, Bitcoin, but it potentially opens the door to more Bitcoin ETPs and other cryptocurrency products.” “It in no way indicates the Commission’s intention to approve listing standards for cryptocurrency securities.”

Many of the approved ETPs have reduced fees in the early stages, including Invesco, which is waiving fees for new Bitcoin ETPs for up to $5 billion in assets for the first six months.

“We believe digital assets have the potential to be a transformative asset class, and bringing BTCO to a fully transparent and regulated market truly helps further democratize the asset class,” said Brian Hartigan, Global Head of ETF Investments at Invesco. “I believe this will happen,” he said. .

ARK Invest, Bitwise, Fidelity and Valkyrie are also temporarily waiving fees, according to Investor’s Business Daily.

Unsurprisingly, the price of Bitcoin surged by about 1% on Thursday to around $46,000.