SEC Approval of Spot Bitcoin ETF – Exchange-Traded Products

The U.S. Securities and Exchange Commission (SEC) recently approved the listing and trading of certain spot Bitcoin ETF exchange-traded product (ETP) shares. Previously, the SEC disapproved over 20 filings for similar products, but a court decision prompted a reevaluation. The recent approval comes with investor protections, requiring full disclosure by ETP sponsors, trading on registered exchanges, and adherence to existing rules. The SEC is also reviewing registration statements for 10 more spot Bitcoin ETF (ETPs). While approving these ETPs, the SEC emphasizes caution due to bitcoin’s speculative and volatile nature, noting associated risks like ransomware and illicit activities.

The U.S. Securities and Exchange Commission (SEC) has given the green light for the creation of Bitcoin ETF, exchange-traded funds (ETFs) in the U.S. This means regular investors can now gain exposure to Bitcoin without dealing directly with the complexities and risks of buying the cryptocurrency. Bitcoin ETFs provide a safer way to invest, avoiding the challenges associated with directly purchasing Bitcoin ETF. This move is significant for the crypto industry, and it has sparked increased interest and enthusiasm. The value of Bitcoin has surged over 70% in recent months in anticipation of this Bitcoin ETF approval. The success of these ETFs will depend on factors like fees and liquidity, with some issuers lowering fees to attract investors. Analysts suggest that fees and liquidity will play a crucial role, especially for short-term speculators.

Bitcoin experienced a notable price increase, reaching approximately $47,300 on Thursday morning, up from about $45,700 on Wednesday afternoon after the SEC announcement. Despite this initial surge, the cryptocurrency dipped to around $45,500 following the news of Cboe’s approval, then rebounded to approximately $46,000 intraday.

It’s worth noting that some experts, including ARK Invest CEO Cathie Wood, anticipate potential profit-taking in response to the Bitcoin ETF news, which could lead to a reverse in Bitcoin’s price. Bitcoin had previously seen a substantial rally, reaching over $45,000 by the end of 2023, marking a significant increase from around $27,000 in September, driven in part by growing anticipation of Bitcoin ETF approval.

How do spot Bitcoin ETFs work?

Spot Bitcoin ETFs work similarly to ETFs in India that follow indices like Sensex or Nifty or commodities like gold or silver. In the U.S., these Bitcoin ETFs will be traded on regular stock exchanges, reflecting the value of Bitcoin. What’s convenient is that current investors don’t need separate accounts on cryptocurrency exchanges, and they don’t have to directly invest in Bitcoin. They can still enjoy the potential gains from the digital asset’s price appreciation through these ETFs.