In a historic move, the US Securities and Exchange Commission (SEC) has approved a rule change that will allow the first spot Bitcoin exchange-traded funds (ETFs) to begin trading. The approval is a major milestone in the cryptocurrency industry as it comes after almost a decade of persistent efforts and multiple rejections from the SEC.Thank you for reading this post, don't forget to subscribe!
But the SEC rule change document indicating approval appeared only briefly on the regulator’s website and then disappeared. However, it can still be viewed using the archived version of the URL.
“After careful review, [SEC] “It is found that the proposals are in compliance with the Exchange Act and the rules and regulations applicable to national securities exchanges thereunder,” the commission wrote.
In it, the SEC said the rule change would allow NYSE Arca to convert the Grayscale Bitcoin Trust into a spot Bitcoin ETF and allow the Bitwise Bitcoin ETF and Hashdex Bitcoin ETF to be listed on the new list; Nasdaq to list BlackRock’s iShares Bitcoin Trust
and Valkyrie Bitcoin Fund; And Cboe’s BZX exchange will list the ARK 21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Fund and Franklin Bitcoin ETF.
This means that all 11 eligible applicants have now been allowed to trade on US exchanges.
An exchange-traded fund, or ETF, is an investment vehicle that allows traders to buy shares backed by Bitcoin without directly owning the asset. Bitcoin futures ETFs have been available to US investors for some time, but the SEC has been resistant to spot ETFs, which would be designed to track the real-time price of Bitcoin.
The journey toward this historic approval began in July 2013, when Cameron and Tyler Winklevoss first proposed the Winklevoss Bitcoin Trust. However, citing concerns over Bitcoin’s market volatility and potential investor risks, the SEC officially rejected their proposal in March 2017. This paved the way for subsequent rejections of various Bitcoin ETF proposals over the past few years.
The SEC’s stance against spot Bitcoin ETFs appears to be rooted in concerns about the structure of the cryptocurrency market, including issues such as price discovery, trade execution, liquidity, and potential market manipulation. This skepticism became evident in 2018 when the SEC rejected nine applications in a single day, including those from ETF specialists like ProShares.
In 2020, the departure of SEC Chairman Jay Clayton and the nomination of Gary Gensler as his replacement in January 2021 brought renewed optimism, given Gensler’s deep understanding and past comments on cryptocurrencies.
But it hasn’t been smooth sailing with Gensler at the helm of the securities regulator. Recently a week ago, during cnbc In the interview, the SEC Chairman was calling crypto the “Wild West” and lamenting the non-compliance among industry players.
Nevertheless, there has been continued persistence from various players in the industry, including major financial institutions such as BlackRock, Fidelity, and WisdomTree.
Recently, potential issuers have proposed using only cash creation for shares of their Bitcoin ETFs – a move that would limit the companies’ exposure to handling Bitcoin directly.
Edited by Guillermo Jimenez.
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