Spot BTC ETFs benefits

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The U.S. Securities and Exchange Commission (SEC) has finally approved the first-ever spot Bitcoin ETFs (Exchange-Traded Funds) for trading, signifying a significant leap in mainstream acceptance of crypto assets. 

The approval, disclosed on January 10, 2024, opens the door for both institutional and retail investors to seamlessly participate in bitcoin (BTC) trading using well-regulated stock exchanges. Also, the development comes a day after the U.S. SEC official X account was compromised to post a false ETF approval.

Out of the 14 ETF applications filed by different global asset managers in recent months, the Gary Gensler-led SEC officially approved 11 issuers to list and trade spot Bitcoin ETFs on their respective platforms. 

The cleared issuers include ARK 21Shares, Bitwise, BlackRock, Fidelity Investments, Franklin Templeton, Grayscale, Hashdex, Invesco Galaxy, Valkyrie, VanEck, and WisdomTree. 

Despite nodding to ETFs, the 33rd SEC Chair Gary Gensler noted in his statement that the U.S. agency “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.,” he added. 

Notably, the Wednesday ETF consent came after years of scrutiny by the SEC and pressure from the crypto proponents, which had previously rejected several of these proposals. The first spot bitcoin ETF application was filed in 2013 by Gemini cryptocurrency exchange and custodian bank founders — Cameron and Tyler Winklevoss. 

Although the Securities Commission denied the Winklevoss Twins’ request to launch the ‘Winklevoss Bitcoin Trust’ then, the U.S. SEC was compelled to reconsider its stance on spot Bitcoin ETFs after Grayscale defeated the agency in court last August on a similar matter. 

Positive Implications of Spot Bitcoin ETFs Approval

The positive development has already sparked enthusiasm within the crypto community, with many market participants hailing it as a pivotal moment for the industry. 

Particularly, the ETF approval is seen as a testament to the maturation of the crypto market, as well as a recognition of the increasing demand from investors for well-regulated crypto investment products. 

Amongst other upsides, spot bitcoin ETFs will enable investors to gain direct exposure to the price of bitcoin without having to own the 15-year-old cryptocurrency. Therefore, eliminating the troubles associated with the self-custody of BTC for investors, who see seed phrase protection and wallet management, to be challenging. 

In other words, investors can now access bitcoin through traditional stock exchanges and brokerage accounts without fear of fraud such as the Sam-Bankman Fried’s FTX exchange collapse. 

Despite being the ninth country to approve spot bitcoin ETFs, the U.S. SEC’s approval sets a precedent for other regulatory bodies globally. As one of the most influential financial regulators, the SEC’s decision may prompt other countries to consider similar approvals. Hence, fostering a more consistent and standardized regulatory approach to crypto assets on a global scale. 

It bears mentioning that the UK government plans to issue crypto regulatory frameworks in 2024. Meanwhile, the Dubai Financial Services Authority (DFSA) approved XRP for use by licensed digital asset firms within the Dubai International Financial Centre (DIFC) in 2023.

In addition, experts believe that the introduction of spot bitcoin ETFs will bring a new wave of investors and institutional capital into the crypto market. According to Standard Chartered analysts, the ETFs could add $50 billion to $100 billion to Bitcoin’s market cap in 2024. At press time, its market cap stands at roughly $900 billion according to Coinmarketcap.

Coupled with other positive developments such as the fourth bitcoin halving event expected in April 2024, crypto analysts predict crypto asset prices to rally high in the coming months. Accordingly, Cardano whales have been heavily accumulating ADA wbioe Bitcoin’s whale activity recently reached its highest level since June 2022.  

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