Yesterday, a fake tweet from the U.S. Securities and Exchange Commission (SEC) sent crypto spiraling. And while we don’t have any real answers as to how that happened (or why), the regulator officially approved all the spot Bitcoin ETFs today as anticipated. 👍
In an official release on the SEC website, the regulator unveiled a “Statement on the Approval of Spot Bitcoin Exchange-Traded Products.” The new rules will allow exchange-traded funds to invest directly in Bitcoin, broadening access to the largest cryptocurrency in the $1.7 trillion digital asset sector. ₿
SEC Chairman Gary Gensler has been a vocal opponent of the entire crypto industry. The agency rejected more than 20 exchange rule filings in the last five years, but its loss against Grayscale in the U.S. Court of Appeals for the District of Columbia was the straw that broke the camel’s back. The ruling found that the SEC failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETF, forcing the SEC to reevaluate the application. 🧑⚖️
With roughly a dozen other issuers submitting similar applications on the back of that ruling, the agency had little option but to approve ten spot Bitcoin ETFs simultaneously. That will help create a level playing field for issuers and promote fairness and competition, ultimately benefiting investors and the overall market.
As for why it approved these products now, it noted three things:
- Sponsors will be required to provide full, fair, and truthful disclosure about the products.
- These products are listed and traded on registered national securities exchanges.
- Commission staff separately completed the review of registration statements and can approve them simultaneously.
Most importantly, issuers were able to show there was a strong correlation between Bitcoin’s cash trading and futures contracts trading on the CME Group. The SEC had previously argued that no regulated exchange could adequately monitor Bitcoin trading in a way that would reliably detect fraud and manipulation. With that issue addressed, there was little reason for the regulator to deny the applications any further. 📊
However, the SEC made it clear that its approval does not mean it approves of or endorses Bitcoin, telling investors to remain cautious about the “myriad risks” associated with the industry. ⚠️
The market’s reaction has been somewhat mixed, given how far it had run in anticipation of this approval. With that said, the total crypto market cap made a new cycle high above $1.7 trillion, and altcoins like Ethereum are rising in hopes that more ETF products will be coming down the pike.
Overall, this is a historic day for the crypto market, representing the industry becoming more closely integrated with traditional finance. That should theoretically broaden access to the industry and increase demand over the long term. As for what happens in the short term, that remains anyone’s guess. 🤝
For now, crypto bulls are celebrating, and SEC Chairman Gary Gensler is licking his wounds.
It’ll be interesting to see which ETF managers attract the most assets, given their products are essentially identical and competing on price. But in the longer term, the focus remains on expanding the number (and type) of crypto-related exchange-traded products asset managers can roll out and charge fees for. 🤑