SEC greenlights first U.S.-listed bitcoin ETFs, opening new era

On Wednesday, the U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler announced the approval of the first U.S.-listed exchange-traded funds (ETFs), marking a development for the world’s largest cryptocurrency and the wider crypto sector.

As indicated in a notice posted on the SEC’s website, it approved applications from 11 entities including BlackRock, Ark Investments, 21Shares, Fidelity, Invesco and VanEck. The first funds, which trade on exchanges like stocks and enjoy special tax treatment in the U.S., are poised to commence trading today.

This approval follows months of anticipation and a contentious legal battle. It marks the culmination of a tumultuous 24 hours during which hackers briefly seized control of the SEC’s account on the social media site X. They falsely asserted that the applications had already been approved, causing significant fluctuations in Bitcoin’s price.

Shortly after the announcement, bitcoin was trading at approximately $45,000, significantly below the $69,000 peak recorded in November 2021. However, it was nearly three times the $16,000 low in December 2022 following the collapse of the notorious crypto exchange FTX.

The approvals in the U.S. are expected to lead to a new era for the most popular and liquid crypto token. U.S. institutional and retail investors can now directly access the coin through a regulated product, mitigating the risks associated with unregulated exchanges or the higher costs linked to ETFs investing in Bitcoin futures.

Bitcoin ETF approval sparks excitement

Anticipation for the approval of bitcoin ETFs soared last year following a federal appeals court’s decision that the SEC had erred in rejecting Grayscale Investments’ application to transform its existing Grayscale Bitcoin Trust (GBTC) into an ETF. This ruling compelled the agency to reassess its stance.

Despite his skepticism toward crypto itself, Gensler said that approving such products was “the most sustainable path forward.”

The crypto industry welcomed the development, with Grayscale CEO Michael Sonnenshein expressing excitement about the potential to democratize access to Bitcoin through the U.S.-regulated investment vehicle.

Douglas Yones, head of exchange-traded products at the New York Stock Exchange where some of these products will be listed, stressed that the approval marked a significant “milestone” for the ETF industry.

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