Landmark Approval: SEC Green Lights First Spot Bitcoin ETFs for Public Trading in the U.S.
Summary:
The U.S. Securities and Exchange Commission (SEC) has approved the first spot Bitcoin exchange-traded fund (ETF), allowing it to be publicly traded within the U.S. This landmark decision includes approval of 19b-4 applications from major finance companies, such as ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. The trading will begin when markets open on January 11. Coincidentally, this event falls on Bitcoin Running Day, which marks Hal Finney's historic initiation of "running bitcoin." The approval has caused a split in the crypto community regarding its impact on Bitcoin's price.
On January 10, the U.S. Securities and Exchange Commission (SEC) gave its nod to the first-ever spot Bitcoin exchange-traded fund (ETF), opening doors for public trading within the U.S. This landmark decision saw the approval of 19b-4 applications from major financial organizations like ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. As a result, these organizations' spot Bitcoin (BTC) ETFs are now permitted to be listed and traded on regulated platforms. This trading is expected to kick off on January 11 when markets open.
This endorsement of the spot Bitcoin ETF is significant as it empowers investors for direct access to Bitcoin's price without the need for actual purchase. Instead, they can buy shares in these listed ETFs whose underlying asset is physical Bitcoin. Samir Kerbage, Chief Information Officer at Hashdex, when speaking to Cointelegraph, stated that this momentous day marks the beginning of a new era in the world of digital assets enabling U.S. investors to participate completely in Bitcoin's potential.
The journey to receiving approval for a spot Bitcoin ETF in the U.S. has been long and arduous, with various filings and rejections encountered before the commencement of a new filing cycle in 2023. The SEC had previously rejected spot BTC ETF proposals due to worries about market manipulation and the small size of the market. Nevertheless, with the market size now larger and institutional demand growing, the new filing cycle in 2023 brought about a renewed sense of optimism among cryptocurrency enthusiasts.
A number of dynamics favored the approval of a spot BTC ETF this time. Notably, the market cap of the BTC, nearly $1 trillion, was noticeably larger, and institutional interest had spiked. As a sign of this increased interest, BlackRock, the world's largest asset manager, applied to the SEC for a spot Bitcoin ETF in June 2023. BlackRock's application was a significant boost for the cryptocurrency community, considering it manages assets worth over $8 trillion and has a successful history of ETF approvals.
Interestingly, this milestone coincides with Bitcoin Running Day, which commemorates Hal Finney's historic tweet on January 10, 2009, the day he initiated "running bitcoin."
Bitstamp's U.S. CEO, Bobby Zagotta, labeled it a momentous day in Bitcoin's history, allowing those watching from afar to enter the crypto world through a recognized method. However, he stressed the need for the industry to ensure that crypto ETFs are implemented with sturdy measures from the beginning to prevent any fraudulent activities or market manipulation.
The impact of spot BTC ETF approval on Bitcoin's price has caused a split in the crypto community. While some believe that it would lead to short-term sell-offs declining BTC's price as the news has already been priced in, others see this as a significant milestone that could steer Bitcoin's price positively.
Andrey Stoychev, the Head Project Manager at Nexo, suggested that despite initial falls, the magnitude of this event could drive Bitcoin price higher in the long term, drawing parallels from the introduction of gold ETFs in 2013-2014.
However, some believe that the price rally might begin when the ETFs start trading on January 11 as U.S. markets open. With the introduction of ETF trading, billions could flow into BTC via stock markets.
With the approval, a new compliance-based pathway has been opened for investors to enter the crypto market. Experts are predicting substantial inflow into these ETFs as they begin public trading, symbolizing a significant milestone in Bitcoin's history.
Published At
1/11/2024 2:35:43 PM
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