US SEC approves Bitcoin ETF in watershed moment for cryptocurrency market By Reuters
© Reuters. FILE PHOTO: FILE PHOTO: The U.S. Securities and Exchange Commission logo and cryptocurrency representation are seen in this picture taken on June 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
Written by Hannah Lang and Susan McGee
WASHINGTON/NEW YORK (Reuters) – U.S. securities regulators on Wednesday approved the first U.S. exchange-traded fund (ETF) to track Bitcoin, the world’s largest cryptocurrency and at a watershed moment in the broader cryptocurrency industry, Chairman Gary Gensler said. It was revealed.
The U.S. Securities and Exchange Commission (SEC) approved 11 applications, including BlackRock (NYSE:), Ark Investments/21Shares, Fidelity, Invesco and VanEck, according to a notice on its website. Trading for some products will begin as early as Thursday, and fierce competition for market share is expected to intensify.
10 years in the making, the product is a game-changer for Bitcoin, giving institutional and retail investors exposure to the world’s largest cryptocurrency without holding it directly, and providing a major boost to a cryptocurrency industry that has been mired in a series of scandals. It will.
Standard Chartered (OTC:) analysts this week said the ETF could raise $50 billion to $100 billion this year alone, potentially pushing the price of Bitcoin to $100,000. Other analysts said the inflows would be closer to $55 billion over five years.
“It’s a huge positive thing to institutionalize Bitcoin as an asset class,” said Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. “ETF approval will further legitimize Bitcoin.”
It was last up 3% at $47,300. The cryptocurrency has surged more than 70% in recent months on expectations for the ETF, reaching its highest since March 2022 earlier this week.
Analysts say that with fierce competition expected to secure assets for spot Bitcoin ETFs, success is likely to be focused on fees and liquidity.
Some issuers, including BlackRock and Ark/21Shares, highlighted in new filings this week the urgency to cut their own fees to capture some of the expected capital inflows. Fees range from 0.2% to 1.5%, and many companies waive the fees entirely for a certain period of time.
But for short-term speculators, liquidity may be more important than fees. The more liquid an ETF is, the easier it is for investors to purchase and redeem shares quickly at a price that closely tracks the actual price of Bitcoin.
Companies also expect a surge in online advertising and other forms of marketing. Some publishers, including Bitwise and VanEck, have already released ads touting Bitcoin.
“We’ll see how it works because it’s unprecedented,” said CEO Steven McClurg. “We’ve never had 10 of the same ETFs launch on the same day.” The investment director of Valkyrie, one of the ETFs approved on Wednesday.
‘Milestone’
The green light marks a change of direction from the SEC, which had rejected Bitcoin ETFs for a decade due to concerns that they could be easily manipulated. SEC Chairman Gensler is also a cryptocurrency skeptic.
Jim Angell, an associate professor at Georgetown’s McDonough School of Management, said the Bitcoin ETF could pave the way for other innovative cryptocurrency products. For example, several issuers have already filed spot ether ETFs to track the price of the second-largest cryptocurrency.
“Once the dam breaks, it will be really difficult for the SEC to continue its ‘no-crypto’ approach,” Angel said.
The SEC has finally cleared the Bitcoin ETF, which surged last year, after a federal appeals court ruled that it erred in denying Grayscale Investments’ application to convert its existing Grayscale Bitcoin Trust (GBTC) into an ETF. There is hope that they will approve it. The ruling prompted the agency to reexamine its position.
In a statement, Gensler said approving the product was “the most sustainable path forward” in light of the court ruling, but added that he had not approved Bitcoin, which is risky and volatile.
The cryptocurrency industry celebrated the news.
“Like many forward-thinking investors at Grayscale, we believed that Bitcoin could change the world, and we remain excited by the prospect of democratizing access to this asset through a U.S.-regulated investment vehicle,” said Michael Sonnenshein, CEO of Grayscale. “I’m excited,” he said.
Douglas Yons, head of exchange-traded products at the New York Stock Exchange, where some of the products will be listed, said the approval was also an important “milestone” for the ETF industry.
Cynthia Lo Bessette, head of digital asset management at Fidelity, said the new product should provide “more options for investors looking to get involved in cryptocurrencies.”
The approval came a day after an unauthorized person posted a fake post to the SEC’s account on social media platform X, saying the agency had approved trading in a new product. The agency immediately denied and deleted the post.
On Wednesday, it said it was cooperating with law enforcement agencies, including the Federal Bureau of Investigation (FBI) and the SEC’s internal watchdog, to investigate the incident.
More confusion ensued Wednesday afternoon when the SEC posted a notice on its website saying the ETF had been approved, then removed, and then reposted.
