The United States’ first regulated spot Bitcoin ETF has received official approval from the U.S. Securities and Exchange Commission. This decision came just a day after a false announcement, mistakenly posted from the SEC’s official Twitter account, caused disruptions in the markets.
On January 10, the securities regulator granted approval for the 19b-4 applications submitted by ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. This approval includes the rule changes necessary for listing and trading spot Bitcoin ETFs on the respective exchanges.
US SEC Officially Approves First Spot Bitcoin ETF
The SEC has given its approval for the first spot Bitcoin ETF, marking a significant change in regulatory dynamics and indicating an increasing acceptance of digital currencies within traditional financial systems. SEC Chair Gary Gensler stated,
“Today, the Commission approved the listing and trading of a number of spot bitcoin exchange-traded product (ETP) shares…While we approved the listing and trading of certain spot Bitcoin ETP shares today, we 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.”
This ETF enables investors to access Bitcoin without the complexities of direct ownership, such as handling cryptographic keys. This move has the potential to attract a wider range of investors, including those who prefer conventional investment instruments.
Following this announcement, Bitcoin’s value has experienced fluctuations, reflecting the optimism and confidence of investors in the cryptocurrency’s future. The recent price volatility underscores the market’s positive reaction to the SEC’s decision.
Experts view this approval as a possible catalyst for more cryptocurrency-based ETFs, which could transform the digital currency industry. The SEC’s decision is interpreted as an acknowledgment of Bitcoin’s legitimacy, signaling that cryptocurrencies may assume a more prominent role in investment portfolios.
Anticipated Surge in Investor Interest
The financial sector is preparing for the repercussions of this decision, with significant investment inflows expected. Valkyrie Investments foresees a $200 million to $400 million influx into its ETF, contributing to a potential collective market increase of $4 to $5 billion in the initial weeks.
VanEck predicts a $1 billion surge in the first few days, with projections reaching $2.4 billion within a quarter. Galaxy Digital envisions a substantial $14 billion influx within the inaugural year, while Bitwise anticipates the spot bitcoin ETF market to expand to approximately $72 billion within a five-year timeframe.
Bitcoin ETF Preparations: Issuers Secure Seed Capital
Preparations for Bitcoin ETF are underway, as issuers secure seed funding to enter this new phase. VanEck leads the pack with a substantial $72.5 million investment in its ETF. Bitwise, having secured a $500,000 seed, has updated its S-1 form, while Pantera Capital is considering a significant $200 million investment. BlackRock’s proposed ETF has an initial seed funding of $10 million.
During this preparatory stage, a competitive battle over fees emerged. Bitwise took the lead by initially offering zero fees, followed by a reduced 0.2% fee (down from the previous 0.24%). BlackRock suggests a 0.2% fee for the first year or until the fund reaches $5 billion, adjusting to 0.3% thereafter. Fees for other ETFs vary, reaching as high as 1.5%.
This move by the SEC signals a shift in regulatory attitudes toward cryptocurrencies, following a recent incident where the SEC’s Twitter account was compromised, falsely announcing premature approval of bitcoin ETFs. The official approval now reflects the SEC’s evolving stance on digital currencies.
The SEC’s approval of 11 Bitcoin ETF is a landmark development, signaling a major shift in the acceptance of cryptocurrencies in traditional finance. While not endorsing Bitcoin itself, the approval allows investors to access it through ETFs, attracting a wider audience.
The positive market reaction indicates confidence in the cryptocurrency’s future. With issuers preparing for significant investment inflows and a competitive fee landscape, this move sets the stage for further developments in the cryptocurrency investment space. The SEC’s evolving stance reflects a changing regulatory attitude toward digital currencies, reinforcing their legitimacy within the mainstream financial landscape.
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