US Securities regulator gives nod to historic Bitcoin ETF launch

WEB DESK: In a groundbreaking development for the world of cryptocurrencies, the US Securities and Exchange Commission (SEC) has granted approval to the first US-listed exchange-traded funds (ETFs) designed to track Bitcoin.

The regulatory nod, despite some cautionary voices, marks a significant milestone for the crypto industry.

The SEC has given the green light to 11 applications, with notable players such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck among the approved issuers.

These ETFs are poised to commence trading on Thursday, triggering fierce competition for market share in the evolving landscape.

A culmination of a decade-long effort, these ETFs represent a game-changer for Bitcoin, enabling investors to gain exposure to the world’s largest cryptocurrency without direct ownership.

The move is anticipated to provide a substantial boost to an industry that has grappled with various scandals in recent times.

Andrew Bond, Managing Director and Senior Fintech Analyst at Rosenblatt Securities, lauded the development, stating, “It’s a huge positive for the institutionalisation of Bitcoin as an asset class.”

According to Standard Chartered analysts, these ETFs have the potential to attract between $50 billion and $100 billion in the current year alone. Meanwhile, others predict inflows closer to $55 billion over the next five years.

For context, as of Wednesday, the market capitalization of Bitcoin exceeded $913 billion, and US ETFs’ total net assets stood at $6.5 trillion as of December 2022.

Bitcoin’s value has surged by 3 per cent, reaching $47,300, following the announcement. The cryptocurrency has experienced a remarkable 70 per cent surge in recent months, driven by the anticipation of an ETF, reaching its highest level since March 2022.

Industry experts highlight that success in attracting investments will hinge on fees and liquidity. Some issuers, including BlackRock and Ark/21Shares, have already adjusted their proposed fees, ranging from 0.2 per cent to 1.5 per cent, with certain firms waiving fees entirely for a specified period.

Analysts emphasise the importance of liquidity, particularly for short-term speculators.

In anticipation of the ETF launch, companies are gearing up for a flurry of online advertising and marketing efforts. Bitwise and VanEck are among those who have already released ads promoting Bitcoin as a viable investment option.

The SEC’s approval comes on the heels of a recent incident where an unauthorised individual posted a fake announcement on the SEC’s social media account, falsely claiming approval for the products.

The agency promptly disavowed and deleted the post, confirming an ongoing investigation in coordination with law enforcement and its internal watchdog.

Despite the incident and a momentary confusion in the SEC’s announcement, the crypto industry remains jubilant. Grayscale CEO Michael Sonnenshein expressed excitement about the prospect of democratising access to Bitcoin, while NYSE’s Douglas Yones hailed the approval as a “milestone” for the ETF industry.

According to Reuters, Cynthia Lo Bessette, Head of Digital Asset Management at Fidelity, sees the new products as providing “increased choice for investors who want to engage with” crypto.

Some regulatory experts posit that the approval of Bitcoin ETFs could pave the way for innovative crypto products, with several issuers filing for ETFs tracking other cryptocurrencies.

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