In a major breakthrough for the cryptocurrency market, U.S. regulators have given the green light for exchange-traded funds (ETFs) directly investing in Bitcoin. This marks a significant milestone for the approximately $1.7 trillion digital asset sector.
The Securities and Exchange Commission, responsible for investor protection, granted approval to industry giants such as BlackRock, Invesco, and Fidelity, as well as smaller competitors like Valkyrie. This decision is a departure from the SEC’s historical opposition to Bitcoin ETFs, dating back to 2013 when the Winklevoss twins proposed one.
The surprising move follows BlackRock’s application last June and an appeals court ruling labeling the denial of a different application as “arbitrary and capricious.” This triggered a surge in cryptocurrency prices amid speculation that U.S. regulators would finally embrace the ETF structure.
SEC Chair Gary Gensler emphasized caution, stating, “While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin.
Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
One of the SEC’s past concerns was the lack of a regulated exchange capable of effectively monitoring Bitcoin trading to detect fraud and manipulation. However, this time, the SEC cited a correlation between spot and futures trading, suggesting that surveillance mechanisms, particularly on exchanges like Kraken and Coinbase, could help address these concerns.
The news comes on the heels of a false post on the SEC’s official Twitter account claiming approval of the ETFs, leading to Bitcoin price fluctuations. The cryptocurrency, currently priced around $46,300, has experienced heightened volatility in recent times.
Industry experts and analysts see this approval as a game-changer. Campbell Harvey, a finance professor at Duke University, noted, “The ETF makes it easy to add to your portfolio.” This development also signifies a step towards maturity for the cryptocurrency industry, aligning it more closely with traditional finance.
SEC’s groundbreaking approval of Bitcoin ETFs.
