SEC Greenlights Inaugural Bitcoin ETFs

US regulators have granted approval for the introduction of exchange-traded funds (ETFs) focused on spot Bitcoin trading. This move facilitates easier access to the cryptocurrency for retail and institutional investors through conventional securities exchanges.

Notable financial institutions such as BlackRock, Grayscale, VanEck, and Fidelity are among the 11 approved entities permitted to issue securities tied to the price fluctuations of Bitcoin.

Australian investors will have the opportunity to engage with these Bitcoin spot price ETF products listed in the US through local brokerages.

An Exchange-Traded Fund provides a convenient avenue for investing in assets or a collection of assets without the need to directly acquire the assets.

The decision by the Securities and Exchange Commission is a significant development for investors, eliminating the need for retail investors to handle cryptographic keys, manage Bitcoin wallets, or engage with cryptocurrency exchanges in order to gain exposure to Bitcoin.

All 11 tickers start trading tomorrow on The NY Stock Exchange, NASDAQ and CBOE:

IBIT (Blackrock)
GBTC (Grayscale)
HODL (VanEck)
ARKB (ARK)
FBTC (Fidelity)
BTCO (Invesco Galaxy)
DEFI (Hashdex)
EZBC (Franklin)
BRRR (Valkyrie)
BTCW (Wisdomtree)
BITB (Bitwise)

Chair Gary Gensler’s statement read:

“Today, the Commission approved the listing and trading of a number of spot bitcoin exchange-traded product (ETP) shares… Investors today can already buy and sell or otherwise gain exposure to bitcoin at a number of brokerage houses, through mutual funds, on national securities exchanges, through peer-to peer payment apps, on non-compliant crypto trading platforms, and, of course, through the Grayscale Bitcoin Trust. Today’s action will include certain protections for investors:

First, sponsors of bitcoin ETPs will be required to provide full, fair, and truthful disclosure about the products. Investors in any bitcoin ETP that is listed and traded will benefit from the disclosure included in public registration statements and required periodic filings. While these disclosures are required, it is important to note that today’s action does not endorse the disclosed ETP arrangements, such as custody arrangements.

Second, these products will be listed and traded on registered national securities exchanges. Such regulated exchanges are required to have rules designed to prevent fraud and manipulation, and we will monitor them closely to ensure that they are enforcing those rules. Furthermore, the Commission will fully investigate any fraud or manipulation in the securities markets, including schemes that use social media platforms.[3] Such regulated exchanges also have rules designed to address certain conflicts of interest as well as to protect investors and the public interest.

Further, existing rules and standards of conduct will apply to the purchase and sale of the approved ETPs. This includes, for example, Regulation Best Interest when broker-dealers recommend ETPs to retail investors, as well as a fiduciary duty under the Investment Advisers Act for investment advisers. Today’s action does not approve or endorse crypto trading platforms or intermediaries, which, for the most part, are non-compliant with the federal securities laws and often have conflicts of interest.

Third, Commission staff is separately completing the review of registration statements for 10 spot bitcoin ETPs simultaneously, which will help create a level playing field for issuers and promote fairness and competition, benefiting investors and the broader market…While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

For the last 10 years, the SEC has denied every attempt to create a Bitcoin ETF, and of course Gary is gratuitous in defeat…

Following the news, Bitcoin topped around $47,000/USD, with altcoins mainly being favoured, with Ethereum reaching as high as $2,645/USD this morning.

The reaction has been overwhelmingly positive.

Franklin Templeton has lead the way, uploading the Bitcoin laser eyes onto their X (Twitter) display photo:

Some analysts have already stated inflows over the first 5 years could exceed $55 billion. Analysts from Standard Chartered believe the ETFs could accumulate $50-$100 billion this year in 2024 alone, driving the price beyond $100,000.

In contrast, other analysts have adopted a more cautious stance in their forecasts. They suggest that ETFs could play a role in stabilising cryptocurrency prices by expanding their usage and appealing to a broader audience.

Interesting year coming up for Bitcoin and the wider cryptocurrency industry!

Australia is poised to authorise a domestic spot Bitcoin ETF within the initial six months of this year.