SEC Greenlights Historic Wave of Bitcoin Spot ETFs: a Game-Changer for Cryptocurrency

After a decade of rejections, regulatory authorities clear the way for Bitcoin ETFs, transforming the landscape of digital asset investment.

After a long period of deliberation, the U.S. Securities and Exchange Commission (SEC) has finally given its approval for the first group of Bitcoin spot Exchange-Traded Funds (ETFs) to be traded in the United States.

The SEC, which has been considering the approval of Bitcoin-backed ETFs for almost a decade, granted approval late Wednesday, despite expressing several concerns that challenge its responsibility to safeguard investors.

According to a document posted on the SEC’s website on Wednesday, all 11 Bitcoin ETF applicants have received approval to trade on national securities exchanges such as the NYSE, Nasdaq, and CBOE. This includes funds offered by Grayscale, Bitwise, Hashdex, BlackRock, Valkyrie, Ark Invest/21Shares, Invesco/Galaxy, VanEck, WisdomTree, Fidelity, and Franklin Templeton. “Each proposal seeks to list and trade shares of a Trust that would hold spot bitcoin, in whole or in part. This order approves the Proposals on an accelerated basis,” the SEC stated.

This announcement corroborates previous notices from the CBOE that multiple spot Bitcoin ETFs, including funds from Ark, Fidelity, and Invesco, would commence trading at 9:30 am ET on Thursday.

The SEC has previously rejected spot ETFs due to concerns that the underlying Bitcoin spot market was not adequately regulated and was therefore unsuitable for public markets. However, a court defeat to Grayscale in August compelled the agency to conduct a “fresh evaluation” of ETF applications, marking a significant milestone in the mainstream adoption of the world’s largest cryptocurrency.

 “The Commission finds that the Proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange,” the agency stated in its approval order, adding that their rules are adequate to “prevent fraudulent and manipulative acts and practices.”

SEC Chairman Gary Gensler, who cast the deciding vote in the agency’s 3-2 approval decision, said, “Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.” He added, “While we approved the listing and trading of certain spot bitcoin [exchange-traded product] 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.”

Following the approval of nearly a dozen investment products that will hold the world’s largest cryptocurrency, Bitcoin prices surpassed the $47,000 mark on Thursday. This could be a pivotal moment for the $1.7 trillion digital asset market.

An ETF is a security that trades like an ordinary company share but is ultimately valued by a single asset, or a group of underlying assets, that it holds. In the case of a Bitcoin ETF, the listing itself will be backed by the actual cryptocurrency, not just a futures contract tied to its value. Approximately a dozen companies, including Franklin Templeton, Fidelity, the Ark21 unit of Cathie Wood’s Ark Investment, WisdomTree, and Invesco, all submitted requests to the SEC for approval to list their individual ETFs.

Depending on customer demand, the Bitcoin purchases required to match the money invested in each ETF could significantly boost overall Bitcoin prices, as well as other digital assets in the global cryptocurrency market.