ALBAWABA - The U.S. Securities and Exchange Commission (SEC) has granted approval for a change in rules, allowing the creation of Bitcoin exchange-traded funds (ETFs) in the United States, local media reported. This long-awaited decision opens up access to the controversial and volatile cryptocurrency for ordinary investors, aiming to provide a regulated avenue for exposure to Bitcoin.
The approval is expected to prompt the transformation of Grayscale Bitcoin Trust, holding approximately $29 billion in cryptocurrency, into an exchange-traded fund. Major issuers like iShares and Fidelity are also anticipated to launch competing funds, with the first ETFs set to begin trading on Thursday.
This move is seen as a historic event in the adoption of the cryptocurrency, offering institutions and financial advisors a familiar and organized way to engage with or invest in Bitcoin. Cathy Wood, CEO of Ark Invest, commented, "We believe that the SEC's approval, if and when we get it and others get it, is a green light for institutions. We've spoken to a few of them, and they are much more interested now that the SEC has effectively paved the way," as reported by CNBC.
This decision follows a misleading statement on social media by the SEC's official account on Tuesday, falsely claiming approval for Bitcoin ETFs. The SEC clarified that the account had been compromised.
For years, the regulatory body had opposed what is known as an immediate Bitcoin ETF, with several companies submitting and withdrawing applications in the past. Former SEC Chairman Gary Gensler had been openly critical of cryptocurrencies during his tenure. However, the regulatory body seems to have shifted its stance on ETFs in 2023.
Cryptocurrency asset management firm Grayscale Investments achieved a significant victory against the SEC in its efforts to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin exchange-traded fund. Initially rejected by the SEC, Grayscale filed a lawsuit, leading to the reversal of the decision.
"It's important to note that today's action by the Commission is limited to exchange-traded products that hold a single non-securities commodity, bitcoin. It should not be read as signaling the Commission's approval of any other securities listing standards for crypto assets or a current status on any other participants' non-compliance with the federal securities laws," stated Gensler in a Wednesday statement.
Optimism about approval surfaced earlier this year when BlackRock, the asset management giant, submitted its application in June, triggering a surge in applications from its competitors. The partnership between Ark Invest and 21Shares has the longest active registration process, leading many industry experts to anticipate the approval of the first Bitcoin ETFs shortly after the beginning of 2024.
Over 10 different companies are now in the process of launching Bitcoin ETFs, with many already reducing their proposed initial fees. It's not guaranteed that all applications will result in fund entry into the market. Cboe indicated on Wednesday afternoon that several Bitcoin ETFs would commence trading on its BZX exchange on Thursday.
The approval of ETFs comes after a year that witnessed significant enforcement actions against cryptocurrency companies and industry leaders, including the conviction of FTX founder Sam Bankman-Fried and multiple actions against the Binance platform and its founder.
