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Bitcoin has been a volatile asset class. ETFs will make cryptocurrency more accessible to main street investors.
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CNN
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After a false start on Tuesday, the Securities and Exchange Commission on Wednesday gave approval to some investment companies to offer “spot Bitcoin” exchange-traded funds.
The regulator's highly anticipated move is expected to make Bitcoin investing more accessible to Main Street investors without requiring them to directly own the digital asset.
SEC Chairman Gary Gensler made this clear in a statement on the SEC's website that the agency remains cautious. “While we approved the listing and trading of certain spot Bitcoin ETP stocks today, we have neither approved nor endorsed Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to cryptocurrencies,” he wrote.
The SEC had a deadline of January 10 to offer a decision on just one of the 11 companies that had applied to offer Bitcoin ETFs. On Wednesday it granted approval to all eleven.
Andrew Harnik/`
FILE – The U.S. Securities and Exchange Commission seal on June 19, 2015 at SEC headquarters in Washington. The Securities and Exchange Commission said on Tuesday, January 9, 2024, that a post had been “compromised.” (` Photo/Andrew Harnik, File)
Bitcoin, the leading cryptocurrency, currently has a market capitalization of around $900 billion. Its 15-year history has seen volatile price fluctuations. Most recently, after reaching an all-time high of nearly $69,000 in November 2021, it fell below $17,000 in the “crypto winter” of 2022 and traded mostly above $45,000 in the lead-up to the SEC decision.
About an hour after the news broke on Wednesday, Bitcoin price rose 0.3% to nearly $46,000, according to data from Coinmarketcap.com.
After the market closed on Tuesday, a post on the SEC's X account falsely claimed that the regulator had approved the listing and trading of spot Bitcoin exchange-traded products.
This was quickly debunked by Gensler and the SEC retracted the news. According to On Wednesday, the SEC said the FBI was investigating the matter.
For those considering jumping on the Bitcoin bandwagon, it's important to note that the price of a Bitcoin will be just as volatile whether you invest in it directly yourself or through an ETF.
Earlier this week, Gensler posted a thread on X warning investors about the risks of crypto investing in general. “Investing in crypto assets can also be exceptionally risky and is often volatile. A number of major platforms and crypto assets have become insolvent and/or lost value. “Investments in crypto assets continue to be subject to significant risk,” he said in his post.
These views were shared by many financial advisors and investor watchdog group Better Markets, which strongly opposed the SEC's approval of Bitcoin ETFs. Among his objections is the Bitcoin market's history of artificially inflated trading volumes, known as “wash” trading.
In a scathing statement following the SEC's announcement, the group's president and CEO, Dennis Kelleher, pulled no punches. “As the blatantly lawless crypto industry crashes and burns due to a mountain of arrests, criminal convictions, bankruptcies, lawsuits, scandals, massive losses, and millions of investor and customer victims, who would have thought that the SEC would come to its rescue,” approving one trusted and familiar investment vehicle that enables the mass marketing of a known worthless, volatile and fraud-ridden financial product to Main Street Americans.”
Of course, there are many crypto advocates who are very happy with the move. “A spot Bitcoin ETF is a bridge between traditional finance and the emerging world of crypto. “Enabling investors to join the Bitcoin journey without the technical hurdles of direct ownership is a significant step toward inclusivity,” said Sheila Warren, CEO of the Crypto Council for Innovation, in an emailed statement.
The full list of companies that have received SEC approval to launch Bitcoin ETFs are: Ark Invest along with 21 stocks; Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Hashdex, Invesco, WisdomTree, Valkyrie and VanEck. Some of their ETFs will begin trading tomorrow.
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