SEC Approves Rule Change for Spot Bitcoin ETFs
The U.S. Securities and Exchange Commission (SEC) has made a historic decision by approving a rule change that allows spot Bitcoin exchange-traded funds (ETFs) to be traded. This approval is significant because it marks the culmination of years of effort and multiple rejections from the SEC.
Document Disappears, but Archived Version Remains
The SEC’s rule change document appeared briefly on their website before disappearing. However, you can still access it through an archived version of the URL.
Approval Details
The SEC’s approval allows NYSE Arca to list the Grayscale Bitcoin Trust as a spot Bitcoin ETF, along with newly listed Bitwise Bitcoin ETF and Hashdex Bitcoin ETF. The Nasdaq can list BlackRock’s iShares Bitcoin Trust and Valkyrie Bitcoin Fund. Cboe’s BZX exchange can list ARK 21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Fund, and Franklin Bitcoin ETF. All 11 eligible applicants have now been given permission to trade on U.S. exchanges.
Spot vs Futures ETFs
An ETF is an investment vehicle that allows traders to buy shares backed by Bitcoin without directly owning the asset. While futures ETFs have been available to U.S. investors, the SEC has been resistant to spot ETFs that track real-time Bitcoin prices.
A Long Journey with Rejections
The journey towards this approval began in 2013 when the Winklevoss brothers proposed the Winklevoss Bitcoin Trust. However, the SEC rejected their proposal in 2017 due to concerns about market volatility and investor risks. This rejection set the stage for subsequent rejections of various Bitcoin ETF proposals.
SEC’s Skepticism and Change in Leadership
The SEC’s skepticism towards spot Bitcoin ETFs was rooted in concerns about the structure of the cryptocurrency market, including issues like price discovery, liquidity, and market manipulation. The nomination of Gary Gensler as the new SEC Chair brought renewed optimism due to his understanding of cryptocurrencies.
Persistence Pays Off
Despite challenges, major financial institutions like BlackRock, Fidelity, and WisdomTree continued to push for spot Bitcoin ETFs. Recently, potential issuers proposed using cash-only creation for shares of their Bitcoin ETFs to limit direct exposure to Bitcoin.
Hot Take: A Milestone Achievement for the Crypto Industry
The approval of spot Bitcoin ETFs by the SEC marks a significant milestone for the cryptocurrency industry. It opens up new opportunities for investors to access Bitcoin through regulated investment vehicles. The decision reflects a changing attitude towards cryptocurrencies and signifies growing acceptance in mainstream finance. With major players like BlackRock and Fidelity entering the space, the future looks promising for the adoption and integration of cryptocurrencies into traditional financial systems.
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