In a landmark move for the cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) has granted approval for the first U.S.-listed exchange-traded funds (ETFs) to track Bitcoin. The decision, announced on January 10, marks a watershed moment for both the world’s largest cryptocurrency and the broader crypto industry.
The SEC has given the nod to 11 applications, including those from major players such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Despite concerns raised by some officials and investor advocates regarding potential risks, the regulatory body has given the green light, signaling a significant shift in attitude towards cryptocurrency adoption.
These ETFs are poised to be a game-changer for Bitcoin, allowing investors indirect exposure to the cryptocurrency without directly holding it. This move is anticipated to provide a substantial boost to the crypto industry, which has grappled with various challenges and scandals.
The market debut for most of these ETFs is set for Thursday, ushering in a fierce competition for market share among issuers. Analysts predict that the ETFs could attract between $50 billion to $100 billion in 2024 alone, injecting a substantial influx of capital into the crypto space.
While the market capitalization of Bitcoin surpassed $913 billion as of Wednesday, analysts expect competition for inflows will be primarily influenced by fees and liquidity. Various issuers have already adjusted their proposed fees, with a range from 0.2% to 1.5%. Some issuers, including BlackRock and Ark/21Shares, have even offered to waive fees entirely for a specific period, emphasizing the importance of attracting short-term speculators.
The SEC’s approval comes on the heels of an unauthorized social media post falsely claiming approval, an incident the SEC is currently investigating. Despite these hiccups, the crypto industry remains in celebratory spirits, viewing this approval as a significant step towards legitimizing and integrating cryptocurrencies into traditional financial markets.
In a noteworthy turn of events, SEC Chair Gary Gensler, known for his skepticism towards crypto, voted in favor of the Bitcoin ETFs. Gensler, along with the two Republican commissioners, approved the products, while the two Democratic commissioners voted against. The approval is seen as a U-turn for the SEC, which had previously rejected Bitcoin ETFs over concerns of potential manipulation.
As the crypto world eagerly anticipates the impact of these approved ETFs on market dynamics, this development could pave the way for further innovation in the cryptocurrency space and potentially signal a shift in the SEC’s stance towards crypto-related products.
