Regulatory approval serves as a possible game-changer for the cryptocurrency
The US Securities and Exchange Commission has now approved 11 spot bitcoin ETFs. The move, considered to be a ‘game-changer’ for the cryptocurrency and its access in the world’s largest financial market, follows a judicial ruling in 2023 that prevented the SEC from prohibiting the launch of an exchange traded product tracking the price of bitcoin.
In the leadup to the announcement, ETF providers such as ARK, BlackRock, and Fidelity released fee structures and information about their bitcoin ETFs.
“The approval of the US spot bitcoin ETFs by the SEC and also the Hong Kong Securities Commission announcement that it too will approve spot bitcoin ETFs, goes far to legitimise bitcoin as an investable global asset,” said Bradley Duke, Chief Strategy Officer at ETC Group. “Here in Europe, we have had secure and efficient spot bitcoin ETPs for over 3.5 years and we are spoiled for choice with the range of physically-backed Crypto ETPs available including many different single-asset Crypto ETPs as well as broad market index products.”
Earlier this week Mark Connors, head of research at 3iQ corp. told WP what he thinks the approval of these ETFs will do for bitcoin investors. Connors predicted that the demand generated by ETF approval in the world’s largest financial market should bring the price of bitcoin much higher. Even though bitcoin has run up in value over recent weeks, Connors doesn’t believe that demand increase has been fully priced in yet.
Connors also predicted that by including bitcoin in passive investment vehicles that have regular rebalancing mechanisms, the approval of these ETFs may serve to smooth out the peaks and troughs that often characterize cryptocurrency performance.
“With Blackrock, Fidelity, Franklin, and Galaxy amongst the parties seeking BTC Spot ETF licenses, and further partnerships from JP Morgan and Goldman leaked recently, it is no surprise that the SEC has moved forward with what is industry consensus and granted these long-delayed licenses,” said Michael Silberberg, head of investor relations at Alt Tab Capital. “In the short term, we expect continued frothy price accumulation on this news as capital flows into the market from a new class of institutional buyers to crypto looking to hedge with BTC, make these products part of their treasury management, and invest in the future of money itself. If we look for an analogy, Gold jumped approximately 250% four months after its first ETF approval and launched an 8-year bull run.”
In a statement following the news of the approval, SEC Chair Gary Gensler noted a word of caution about cryptocurrency investments.
“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,” the statement reads.
