The Securities and Exchange Commission (SEC) has granted approval for 11 bitcoin exchange-traded funds (ETFs), in a watershed moment for the world’s largest cryptocurrency.
“The term ‘watershed moment’ can be a cliche, but in the case of today’s bitcoin ETF news, it could not be more justified,” said Yoni Assia, CEO and co-founder of eToro.
This comes after a turbulent 24 hours that included a tweet from the SEC account announcing the ETF approval, causing a notable spike in bitcoin’s price.
Subsequently, the SEC clarified that the tweet was unauthorised due to an account compromise.
The false announcement led to a 1.5% surge in the bitcoin price for the day, only to reverse course with a subsequent 3.4% decline.
Nevertheless, the SEC officially approved the ETFs on Wednesday, maintaining its cautious stance on cryptocurrencies.
While spot bitcoin ETFs have been accessible in various markets, recent approvals in the US are anticipated to inaugurate a new era for the foremost and most liquid cryptocurrency.
“For 15 years, bitcoin has been growing in prominence as an asset class amongst retail investors, while in a reversal of traditional roles, institutional investors have remained largely on the sidelines, waiting for traditional finance rails to be put in place,” added Assia.
Institutional and retail investors in the US can now directly engage with the coin through a regulated product, eliminating the risks associated with unregulated exchanges or the higher costs linked to ETFs investing in bitcoin futures.
The SEC’s decision signifies a notable reversal in its stance.
For almost a decade, the regulator resisted spot bitcoin ETFs, citing concerns about susceptibility to manipulation and fraud within the cryptocurrency realm. However, Grayscale’s successful challenge last year, overturning the SEC’s rejection of a previous spot bitcoin application, marked a turning point.
A federal appeals court’s ruling in August deemed the SEC’s decision “arbitrary and capricious,” prompting a shift in the regulator’s position.
While some crypto enthusiasts are optimistic that the ETFs will generate significant demand for digital assets, sceptics among ETF observers doubt that substantial sums will pour into these products.
Nonetheless, “today’s news provides an answer for institutional demand for bitcoin. It’s good news for crypto markets and supportive of our belief that bitcoin is an unstoppable technology. It is digital gold, and taking a long-term view, I believe that it represents the intersection of finance, economics, and technology,” said Assia.
“For our users, retail investors, today’s news is positive as it will be supportive of the growth of bitcoin as an asset class, but I believe that the majority of ordinary investors will want to continue to buy and hold real BTC,” he added.