SEC Approves Bitcoin ETFs for Everyday Investors
The exchange-traded funds will allow investors to buy bitcoin as easily as stocks or mutual funds
A ruling Wednesday clears the way for the first U.S. exchange-traded funds that hold bitcoin to be sold to the public.
The decision by the Securities and Exchange Commission will allow mainstream investors to buy and sell bitcoin as easily as stocks and mutual funds. Expectations of U.S. regulatory approval for such funds drove the price of bitcoin to the highest level in about two years. The digital currency fell to just below $46,000 late Wednesday, up from $17,000 in January 2023.
Until now, everyday investors who wanted to buy and sell digital currencies have had to either trade on crypto exchanges and incur hefty transaction fees or purchase products that track bitcoin in less direct ways. At least half a dozen bitcoin-futures ETFs are already on the market. Those funds use futures contracts to provide exposure to bitcoin price moves, though they have been criticized for often straying from bitcoin’s price.
All 11 applications filed by asset managers including BlackRock BLK -0.27%decrease; red down pointing triangle, Fidelity Investments, ARK Investment Management, Invesco, WisdomTree WT 0.86%increase; green up pointing triangle, Bitwise Asset Management, Valkyrie and Grayscale Investments have been greenlighted to list. The new funds, known as spot-bitcoin ETFs because they buy and sell the digital currency itself, are expected to begin trading on Thursday.
Crypto assets were mixed after the SEC’s decision. Ether, the second largest digital currency rose nearly 10%. Coinbase Global COIN -0.46%decrease; red down pointing triangle, the largest publicly traded crypto exchange whose stock price tends to move in tandem with bitcoin, fell 1.4% in after-hours trading. Coinbase is listed as the custodian on at least eight spot bitcoin ETF applications.
The SEC previously rejected applications for so-called spot bitcoin ETFs on the grounds that the underlying market is vulnerable to fraud and market manipulation. SEC Chair Gary Gensler has said more regulation and investor protection is needed before a swath of investors get access to the crypto market.
Gensler acknowledged the latest ETF applications were similar to ones the SEC had denied in the past. But he said a court ruling last year in favor of crypto asset manager Grayscale had compelled the change.
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“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” he said.
He added the SEC “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,” Gensler said.
The argument that the bitcoin market is rife with fraud and easily manipulated got a boost Tuesday when the SEC’s official X account was hac