Investing.com - The U.S. Securities and Exchange Commission (SEC) has approved changes to rules, enabling the establishment of Bitcoin exchange-traded funds (ETFs) in the U.S. This much-anticipated decision will allow everyday investors access to the volatile and often contentious cryptocurrency.
This move is likely to lead to the transformation of the Grayscale Bitcoin Trust, which currently holds approximately $29 billion of the cryptocurrency, into an ETF. It may also lead to the introduction of competing funds from conventional issuers like BlackRock’s iShares and Fidelity. The first of these funds are expected to start trading as early as Thursday.
This approval could mark a significant milestone in the adoption of cryptocurrency by mainstream finance. The ETF structure provides institutions and financial advisors with a regulated and familiar avenue to gain exposure to Bitcoin.
Ark Invest CEO Cathie Wood expressed optimism on CNBC’s “Halftime Report,” stating that the SEC approval is a green light for institutions. Ark Invest has collaborated with 21Shares on a proposed Bitcoin fund.
This decision follows a false announcement made by an official SEC social media account on Tuesday, stating that Bitcoin ETFs had been approved. The SEC clarified that the account had been compromised.
In the past, the SEC has repeatedly opposed a so-called spot Bitcoin fund, and many firms have filed and then withdrawn applications for ETFs. SEC Chair Gary Gensler has been a vocal critic of crypto during his tenure.
However, the regulator seemed to shift its stance on the ETF question in 2023, possibly influenced by an August court decision that criticized the SEC for blocking Bitcoin ETFs while permitting funds that track Bitcoin futures.
The approval of Bitcoin ETFs comes after a year of significant legal actions against crypto firms and industry leaders, including the conviction of FTX founder Sam Bankman-Fried and multiple actions against Binance and its founder Changpeng Zhao.
This development has boosted optimism around the approval of Bitcoin ETFs, leading to a surge in applications from rival firms after BlackRock (NYSE:BLK) applied in June. More than ten different firms are currently in the process of launching a Bitcoin ETF, with heavy marketing campaigns and varying expense ratios expected to shape the competition.
However, not all applications will necessarily result in a fund entering the market. The Cboe website indicated on Wednesday afternoon that several Bitcoin ETFs would start trading on its BZX exchange on Thursday.
The expectation of the ETF has seemingly boosted the price of Bitcoin in recent months. Some crypto advocates believe the introduction of Bitcoin ETFs will attract new types of investors who were previously deterred by concerns about custody and the security of crypto-specific exchanges.
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