Bitcoin ETFs Secure SEC Approval: An Easier Path to Cryptocurrency

• Bitcoin ETFs Get Regulatory Approval in U.S.
• Details of the Approval
• Historical SEC Rejections and Court Rulings
• Importance of a Spot Bitcoin ETF
• Regulators' Opinions
• Buzz Around Bitcoin ETFs Approval
• Industry Reactions

Bitcoin ETFs Get Regulatory Approval in U.S.

The Securities and Exchange Commission (SEC) granted approval for Bitcoin$42,260 -0.64% exchange-traded funds (ETFs) to be listed on the New York Stock Exchange, Nasdaq, and Cboe Global Markets. This move allows for the trading of these securities effective immediately, significantly expanding access to the 15-year-old cryptocurrency. The approval follows numerous delays and rejections of similar proposals in the past.

Details of the Approval

About a dozen firms, including BlackRock, Fidelity, and Grayscale, sought to create Bitcoin (BTC) ETFs. In recent times, these companies have declared and, in some instances, reduced the fees they plan to levy, suggesting a looming fierce competition for investors' funds. These are spot ETFs, which hold Bitcoin versus the approved Bitcoin futures ETFs that hold derivatives contracts connected to BTC.

Historical SEC Rejections and Court Rulings

The SEC's approval comes a few months after a significant legal setback. In August, the D.C. Circuit Court of Appeals ruled that the SEC's decision to reject Grayscale's proposition to turn its roughly $26 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF was arbitrary and capricious. In light of this ruling, SEC Chair Gary Gensler highlighted a court loss in 2023 as one of the factors that motivated the decision to approve the filings.

Importance of a Spot Bitcoin ETF

Proponents of a spot Bitcoin ETF have consistently argued that regulated trading products focused on the world's first cryptocurrency would enable institutional and retail clients to gain exposure to Bitcoin's price movements without the need for them to establish wallets or directly invest in the digital asset. Shares of the ETF, for instance, will be accessible to any U.S. investor with a brokerage account.

Regulators' Opinions

SEC Commissioner Hester Peirce, a staunch advocate for the digital asset industry, termed the logic behind the regulator's previous rejections for spot Bitcoin ETF filings as perplexing. However, SEC Commissioner Caroline Crenshaw objected to the approval order, citing substantial evidence that the Bitcoin spot market is not immune to fraud or manipulation.

Buzz Around Bitcoin ETFs Approval

The approval from the SEC was highly anticipated towards the end of 2023, with a series of meetings between the agency and the proposed ETF issuers suggesting that a launch was imminent. This optimism correlated with a surge in Bitcoin's price from around $27,000 in October to over $45,000 at the beginning of 2024. The approval also led to a rise in the shares of the Grayscale Bitcoin Trust (GBTC) to $40, its highest price since December 2021.

Industry Reactions

Jenn Rosenthal, vice president for communications at Grayscale, confirmed necessary regulatory approvals had been received to uplist GBTC to NYSE Arca. Hashdex Chief Investment Officer Samir Kerbage referred to the approval as a monumental day in the history of digital assets.

Edited by Jonathan Stoker