The US Securities and Exchange Commission (SEC) granted approval on Wednesday to the first US-listed exchange-traded funds (ETFs) tracking Bitcoin.
The approval encompasses 11 applications from major entities like BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, marking a groundbreaking moment for both Bitcoin and the broader crypto industry.
Despite some officials and investor advocates expressing concerns about potential risks, the SEC’s green light paves the way for ETFs to begin trading on Thursday.
This move, a decade in the making, holds considerable significance for Bitcoin, providing investors with exposure to the world’s largest cryptocurrency without direct ownership.
The approved ETFs are expected to introduce intense competition for market share among issuers. Analysts anticipate significant inflows, with projections ranging from $50 billion to $100 billion in 2023 alone, according to Standard Chartered analysts.
However, some industry experts suggest a more conservative estimate of around $55 billion over the next five years.
Bitcoin’s market capitalization, exceeding $913 billion as of Wednesday, positions it as a formidable asset.
The cryptocurrency’s recent surge of over 70% in anticipation of the ETF approval underscored the market’s enthusiasm.
The battle for investor inflows will hinge on factors such as fees and liquidity. To remain competitive, issuers, including BlackRock and Ark/21Shares, adjusted proposed fees, ranging from 0.2% to 1.5%. Many firms offered fee waivers for specific periods.
The success of these ETFs may also depend on robust liquidity, crucial for short-term speculators navigating in and out of products.
SEC Approves Bitcoin ETFs Amid Social Media Scare
Companies are preparing for an influx of online advertising and marketing to promote Bitcoin as a viable investment.
Despite the unprecedented launch of multiple ETFs on the same day, industry participants remain optimistic about the potential impact.
The SEC’s approval comes on the heels of an unauthorized post on social media falsely claiming approval for the products, leading to a swift disavowal and deletion by the agency.
The SEC is now coordinating with law enforcement and its internal watchdog to investigate the incident.
The cryptocurrency industry, despite these incidents, celebrates the SEC’s decision. Grayscale CEO Michael Sonnenshein expressed excitement about democratizing access to Bitcoin, emphasizing its potential to change the world.
While regulatory experts believe the Bitcoin ETFs could open doors for innovative crypto products, concerns persist.
Better Markets CEO Dennis Kelleher cautioned that Bitcoin remains vulnerable to fraud, labeling the SEC’s decision a “historic mistake.”
SEC Chair Gary Gensler, a known crypto skeptic, voted alongside Republican commissioners to approve the ETFs, signaling a departure from the SEC’s previous rejections based on concerns about potential market manipulation.
Gensler emphasized that the SEC’s approval did not endorse Bitcoin, emphasizing its speculative and volatile nature, often linked to criminal activities.
The SEC’s decision marks a U-turn in its approach to Bitcoin ETFs, offering potential opportunities for further developments in the cryptocurrency space.