Crypto Community Celebrates As Spot Bitcoin ETF Finally Approved

The US Securities and Exchange Commission (SEC) recently approved various rule changes concerning the introduction of Bitcoin exchange-traded funds (ETFs) in the United States. This decision is expected to lead to the conversion of the Grayscale Bitcoin Trust, holding around $29 billion in cryptocurrency, into an ETF. Mainstream issuers like BlackRock and Fidelity are also likely to launch competing funds, with trading set to commence sometime this week.

This approval comes amid a year marked by significant law enforcement actions targeting crypto firms and industry leaders, including the conviction of FTX founder Sam Bankman-Fried and multiple actions against Binance and its founder Changpeng Zhao.

SEC Finally Comes Around

The approval is seen as a significant step in integrating crypto into mainstream finance, providing institutions and financial advisors with a familiar and regulated route to gain exposure to Bitcoin. Ark Invest CEO Cathie Wood expressed optimism about institutional interest, stating that the approval is a green light for institutions.

While the SEC has traditionally opposed spot Bitcoin funds, a shift in stance on ETFs emerged in 2023, potentially influenced by a court decision criticizing the SEC for blocking Bitcoin ETFs while allowing funds tracking BTC futures. SEC Chair Gary Gensler emphasized that the approval specifically applies to exchange-traded products (ETPs) holding Bitcoin, a non-security commodity. This approval does not signal a willingness to approve listing standards for crypto asset securities.

To The Moon

The optimism for approval gained momentum when BlackRock filed an ETF application in June, triggering a surge in applications by other firms. Over ten firms are in the formal process toward a launch, each competing for market leadership with varying expense ratios and marketing efforts. Some firms have already reduced their proposed fees. While not guaranteed, several BTC ETFs are expected to begin trading on the Cboe BZX exchange soon.

The anticipation of ETFs has influenced a recent surge in cryptocurrency prices, as advocates believe their introduction will stimulate demand via investors previously deterred by custody and exchange security concerns.