After years on the drawing board, the Securities and Exchange Commission (SEC) announced that it has officially approved Bitcoin exchange-traded funds (ETFs) to be listed in the U.S.
The SEC has greenlighted 11 applications, including those from:
- ARK 21Shares Bitcoin ETF (ARKB)
- Blackrock's iShares Bitcoin Trust (IBIT)
- Fidelity Wise Origin Bitcoin Trust (FBTC)
- Valkyrie Bitcoin Fund (BRRR)
- VanEck Bitcoin Trust (HODL)
Approval was granted despite cautions raised by certain officials who have expressed concerns about the potential risks associated with these financial products.
"While we approved the listing and trading of certain spot bitcoin ETP shares today, we didn't approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto," SEC Chair Gary Gensler stated in the announcement.
What are Bitcoin ETFs?
An ETF is the most prevalent and widely recognized form of exchange-traded products (ETPs). ETPs encompass not only ETFs, but also exchange-traded notes (ETNs), commodity pools and other product types.
An ETF provides investors with the opportunity to profit from the price fluctuations of its underlying assets without direct engagement with Bitcoin. This aspect fueled the widespread desire for a Bitcoin ETF over the years.
A Bitcoin-oriented ETF means that Bitcoin can be treated like a regular investment fund, such as stocks and bonds.
And so, buying and trading Bitcoin will not be limited to crypto exchanges as ETFs can be traded on traditional market exchanges like stock markets.
Approval Came After Fake News on X
This announcement came after SEC's official X account posted Tuesday that it approved Bitcoin ETFs. However, it turned out that @SECGov was hacked, and that it was fake news.
The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024
"Today the SEC grants approval of Bitcoin ETFs for listing on all registered national securities exchanges. The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection,” the deleted post read.
What Bitcoin ETFs Mean for the Crypto World
Mainstream financial institutions have been largely locked out of the world's premier cryptocurrency. This relegation to niche corners stifled broader Bitcoin adoption.
Experts predict that Bitcoin’s market will expand after today’s approval. Having the status of an ETF allows for an easier way for investors to get into Bitcoin, which also means a much-awaited rise in its value.
The deadline for the SEC’s decision on Bitcoin ETFs was on January 10. It was so highly anticipated that the price of Bitcoin Core (BTC) has risen by 60% over the past three months.
After the fake news about the approval spread, BTC's price rose to nearly $48,000, an all-time high since March 2022.
IRAs, 401(k)s and pension funds now can join prominent players in gaining access to Bitcoin via the ETF. This is expected to propel mass adoption, promising an influx of capital and potential mainstream acceptance.
Still, it remains to be seen how this decision will play out in the long term, but one thing is certain: The landscape of financial investing has been irreversibly altered.