Bitcoin ETFs get the nod from the US SEC a big step for the crypto market
On Wednesday, the U.S. Securities and Exchange Commission (SEC) greenlit the first Bitcoin ETFs to be listed in the U.S. This marks a significant moment for the largest cryptocurrency and the overall crypto industry. The SEC approved 11 applications, including those from BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, despite concerns about potential risks raised by some officials and investor advocates.
The majority of these products are set to start trading on Thursday, according to issuers, initiating a competitive race for market dominance.
After a decade of development, these ETFs represent a significant shift for Bitcoin. They allow investors to participate in the world’s largest cryptocurrency without owning it directly, providing a substantial uplift for the crypto industry, which has faced various challenges.
Andrew Bond, Managing Director and Senior Fintech Analyst at Rosenblatt Securities, emphasized, “It’s a substantial positive step for the institutionalization of bitcoin as an asset class.”
Analysts at Standard Chartered suggested that the ETFs might attract between $50 billion to $100 billion in the current year alone. However, some other analysts predict a more conservative estimate of around $55 billion over the next five years.
As of Wednesday, the market capitalization of Bitcoin exceeded $913 billion, according to CoinGecko. In comparison, as of December 2022, the total net assets of U.S. ETFs were reported to be $6.5 trillion by the Investment Company Institute.
Bitcoin saw a 3% increase, reaching $47,300, as anticipation for the ETF fueled a more than 70% surge in recent months, pushing it to its highest level since March 2022.
Analysts highlight that the competition for inflows hinges on fees and liquidity. Some issuers, like BlackRock and Ark/21Shares, reduced proposed fees in recent filings, ranging from 0.2% to 1.5%, with some waiving fees initially. Liquidity might be crucial for short-term speculators.
Companies are gearing up for intense online advertising. Bitwise and VanEck have already released ads promoting Bitcoin as an investment.
Despite a fake post on the SEC’s social media account and a confusing announcement, the crypto industry celebrates the approvals. Grayscale CEO Michael Sonnenshein emphasizes the potential of Bitcoin to democratize asset access.
The incident hasn’t dampened the significance of the approval for the ETF industry, according to Douglas Yones, head of exchange-traded products at the NYSE.
Fidelity’s Cynthia Lo Bessette sees the new products as offering “increased choice for investors who want to engage with” crypto.
Regulatory experts believe Bitcoin ETFs could pave the way for innovative crypto products. The SEC’s stance on crypto may change after these approvals, opening possibilities for other cryptocurrencies.
Jim Angel, associate professor at Georgetown’s McDonough School of Business, remarks, “Once the dam has been breached, it’s going to be really hard for the SEC to continue its ‘just say no to crypto’ approach.”
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Bitcoin ETFs get the nod from the US SEC a big step for the crypto market