US securities regulators approves bitcoin exchange-traded funds

The US Securities and Exchange Commission (SEC) has approved a group of 11 bitcoin exchange-traded funds (ETFs), marking a crucial step towards enhancing the credibility and mainstream legitimacy of the digital asset.

The SEC’s decision allows these ETFs to list on major exchanges, including the New York Stock Exchange, “on an accelerated basis,” as stated in the 22-page order released by the regulatory body.

ETFs provide investors with exposure to asset price movements without direct ownership of the underlying assets, although the funds themselves invest in the digital currency.

Thomas Tang, Vice President of Investments at Ryze Labs, remarked that the approval of these ETFs represents a pivotal moment for the digital asset space, indicating a shift towards mainstream acceptance and legitimacy.

Tang emphasized that Bitcoin ETFs, operating within a regulated framework, would introduce institutional credibility to the realm of digital assets.

Originally launched in the 1990s, ETFs gained popularity in the early 2000s as a simple and cost-effective way for investors to speculate on stock indices, commodities, or specific industrial sectors. At the end of 2022, global ETF holdings totaled $6.7 trillion, according to consultancy Oliver Wyman.

Until this regulatory development, investors seeking exposure to bitcoin had to navigate cryptocurrency exchanges and traditional fiat currencies.

With this approval, trading in bitcoin ETFs is now open through mainstream financial institutions such as Fidelity and BlackRock.

SEC Chairman Gary Gensler acknowledged the significance of this regulatory pivot, citing a US court ruling that found the SEC had inadequately explained its reasons for denying a previous ETF proposal from Grayscale.

Gensler emphasized key investor protections, including disclosure requirements and the listing of products on regulated exchanges designed to prevent fraud and manipulation.

Despite approving the listing and trading of certain spot bitcoin ETP shares, Gensler cautioned investors about the risks associated with bitcoin, highlighting its speculative and volatile nature, as well as its historical use in illicit activities.

Republican Representative Patrick McHenry, chair of the House Financial Services Committee, welcomed the SEC’s decision, expressing satisfaction that investors and markets would now have increased access to this transformative technology.