US securities regulators have given the green light to a group of bitcoin exchange-traded funds (ETFs), a highly anticipated decision that is expected to boost the cryptocurrency. The Securities and Exchange Commission (SEC) approved proposals for 11 ETFs to list on leading exchanges, including the New York Stock Exchange, “on an accelerated basis.” ETFs provide investors with exposure to asset price movements without direct ownership of the underlying assets. The approval of these ETFs represents a pivotal moment for the digital asset space, indicating a move towards mainstream legitimacy and acceptance, according to Thomas Tang, Vice President of Investments at Ryze Labs.
Initially launched in the 1990s, ETFs gained popularity in the early 2000s as a simple and low-cost way for investors to bet on stock indices, commodities, or specific industrial sectors. Globally, around $6.7 trillion was held in ETFs by the end of 2022, according to consultancy Oliver Wyman.
Until this approval, investors seeking exposure to bitcoin had to open accounts on cryptocurrency exchanges and transact through traditional mediums of exchange, such as the dollar. With this decision, trading on bitcoin ETFs offered by mainstream financial houses like Fidelity and BlackRock is now possible.
As of 22:50 GMT, bitcoin prices were up 1.4% at $46,576. The anticipation of the SEC’s approval had already impacted the digital currency’s volatility in recent weeks. On Tuesday, bitcoin reached a 22-month high of $47,914 after a fabricated SEC post falsely claimed approval on the X platform (formerly Twitter). However, the SEC later clarified that the market regulator’s account had been compromised, and the tweet was unauthorized.
The SEC had previously blocked similar investment vehicles, but its approach changed after a US court ruling found that the SEC had not adequately explained its reasoning for denying an ETF from Grayscale. SEC Chairman Gary Gensler stated that the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares, emphasizing key protections for investors, including disclosure requirements and listing on regulated exchanges. While the SEC is “merit neutral” on investments, Gensler cautioned investors about the risks associated with bitcoin and crypto-related products. Representative Patrick McHenry welcomed the SEC’s decision, acknowledging the importance of regulatory approval in the cryptocurrency space.
“We are pleased that investors and our markets will finally be afforded greater access to this generational technology,” said the congressman.
