The US Securities and Exchange Commission (SEC) approved the applications for spot Bitcoin ETFs, ending the decade-long wait dominated by multiple rejections. The Gary Gensler-led regulator ended the wait by allowing spot Bitcoin exchange-traded funds (ETFs) to trade in the US.
The securities regulator portrayed a historic move by approving the rule change to allow the inaugural spot Bitcoin ETFs to trade. The approval marks a critical milestone long sought by the crypto industry for nearly a decade of persistently applying amid the numerous rejections by the SEC.
SEC Approves Eligible Spot Bitcoin ETF Proposals
The rule change document briefly appeared on the SEC website only to disappear, confusing the false alarm from the hacked X account. Nonetheless, the addition of the document calmed the crypto minds already exhibiting their paranoid nature.
The SEC revealed in its approval notice that scrutiny of the spot Bitcoin ETF proposals observed consistency with the Exchange Act and the regulations applicable to the national securities exchange.
The SEC outlined that the rule changes will facilitate the NYSE Arca in listing the Grayscale Bitcoin Trust in its bid to convert to the spot Bitcoin ETF. Also enabled to list are the Hashdex Bitcoin ETF and Bitwise Bitcoin ETF.
The approval notice detailed that the Nasdaq is listing the Valkyrie Bitcoin Fund and iShares Bitcoin Trust by Larry Fink-led BlackRock.
The securities regulator illustrated that Cboe’s BZX exchange is listing ARK 21Shares Bitcoin ETF by Cathie Wood’s Ark Invest. Besides, the Cboe is identified as listing the Invesco Galaxy Bitcoin ETF and the Franklin Bitcoin ETF.
The notice implies that the SEC approved all applicants who satisfied the eligibility criterion, allowing them to trade on the US exchanges. In particular, Cboe is listing the VanEck Bitcoin Trust ((XBTF), Fidelity Wise Origin Bitcoin Fund (FBTC) and the WisdomTree Bitcoin Fund (BTCW).
The ETF constitutes an investment vehicle allowing traders to acquire shares backed by Bitcoin without directly owning the asset. The US investors have accessed the Bitcoin futures ETFs, though the SEC has resisted the spot ETF. The latter’s design involves tracking the real-time Bitcoin price.
The notice confirmed the rule change detailed several reservations the SEC expressed regarding spot Bitcoin ETF approval. The issues included the surveillance-sharing agreements giving exchanges, SEC, and issuers detailed data access to facilitate the detection of attempts to manipulate markets.
The notice of approval captured the lingering concerns expressed by the commissioners, particularly the hacking risk. The commission observed that some commenters cited the susceptibility of the Bitcoin blockchain to hacking. Also, the Trusts’ bitcoin is vulnerable to reverse hacking.
The notice listed that commenters were concerned that the Trust could emerge uncovered when the issues shares unsupported by adequate bitcoins held by the custodian.
Journey to Spot Bitcoin ETF
A reflection of the journey to the historic approval traces to July 2013 when Cameron and their twin brother, Tyler Winklevoss, sought the SEC’s nod for the Winklevoss Bitcoin Trust. The SEC officially dismissed the proposal in March 2017, alleging investor risks and Bitcoin’s market volatility.
The SEC’s argument when dismissing Winklevoss’s bid set the tone for rejecting subsequent Bitcoin ETF proposals. The stance portrayed by the SEC against the spot Bitcoin ETF emerged from concerns involving the crypto market’s structure, price discovery, liquidity, market manipulation, and trade execution.
The skepticism became evident in 2018 when the SEC dismissed nine applications in a day. The regulator rejected a bid from the ETF specialist ProShares.
The exit of Jay Clayton in 2020 SEC’s chair was considered a new beginning. The nomination of Gensler in January 2021 triggered renewed optimism, particularly given his more profound understanding of cryptocurrencies.
Gensler would admit in the previous week’s interview with CNBC that the bumpy ride experienced since assuming leadership of the securities regulator. The SEC chair labelled the crypto as the wild west and decried the noncompliance portrayed by industry players.
The persistence from other industry players led by traditional financial institutions, including Fidelity, Wisdom Tree, and BlackRock, was relentless.
The devotion by the fund and asset management service firms has featured a series of revisions for their filings until their ultimate approval on Wednesday.
The approval featured a final hurdle with potential issuers proposing in-kind and cash-only creation and redemption. The issuers upheld the cash-only creation, limiting the firms’ exposure to handling Bitcoin directly.
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