The US regulator has approved exchange-traded funds (RTFs) that invest directly in Bitcoin. Experts call it a major move in the US financial market that will broaden access to the largest cryptocurrency on Wall Street and beyond. A green light marks a U-turn for the Securities and Exchange Commission (SEC), which for a decade has rejected bitcoin ETFs over concerns they could be easily manipulated.
The US SEC approved 11 applications, including BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck, among others, according to a notice on its website. Some products are expected to start trading as early as Thursday.
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According to experts, the move could be a game changer for bitcoin, offering institutional and retail investors exposure to the world’s largest cryptocurrency without directly holding it, and a major boost for a crypto industry beset by a string of scandals.
What are spot bitcoin ETFs and why do they drive up bitcoin prices?
According to analysts at Standard Chartered, ETFs could extract $50 billion to $100 billion this year alone, potentially driving Bitcoin’s price to $100,000.
Bitcoin was last up 3% at $47,300. The cryptocurrency has soared more than 70% in recent months ahead of an ETF forecast, and hit its highest level since March 2022 earlier in the week.
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The landmark decision comes after Grayscale Investments won a key victory over the SEC. A federal appeals court has overturned the rejection of Grayscale’s application to convert its Bitcoin trust into an ETF. The court called the denial “arbitrary and capricious” because the commission did not explain its different treatment of similar products. ETFs that hold Bitcoin futures were approved in 2021.
The SEC’s loss to Grayscale was one of the reasons the SEC approved the applications, said Chairman Gary Gensler.
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“Based on these circumstances and those discussed more fully in the approval order, I feel that the most viable path forward is to approve the listing and trading of these spot Bitcoin ETP shares,” Gensler said.
Crypto proponents have argued for years that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and help bring the industry closer to the more highly regulated world of traditional finance.
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Published: 11 Jan 2024, 06:33 IST