Wednesday marked a watershed moment for Bitcoin and cryptocurrencies as the Securities and Exchange Commission (SEC) approved the first Bitcoin exchange-traded funds (ETFs). Prominent investing firms such as BlackRock, Fidelity, and VanEck were among the 11 applications that the SEC announced as having been approved. The announcement triggered a rally, with BTC price hitting $47,500 in the moments that followed.
Earlier on Tuesday, investors were jittery, and the market was awash with speculation after the X account of the Securities Exchange Commission (SEC) was compromised and an “unauthorized” post announcing the approval of the spot Bitcoin ETF. The SEC itself had voted against Bitcoin exchange traded products, disapproving more than 20 applications. However, the regulator has had to approve the ETFs following a ruling by the U.S. Court of Appeals for the District of Columbia.
What’s different about ETFs?
The Bitcoin ETF approval today means that certain safeguards for will be incorporated by the regulator to cushion investors’ assets. First, sponsors of bitcoin ETPs will be required be transparent and issue full disclosure while advertising their products. This will ensure investors know exactly what they are getting into. On the flipside, it will protect ETF sponsors against potential class-action lawsuits related to “false advertising”, as seen in cases brought against celebrities who endorsed certain crypto companies. Also, the information included in public registration statements and mandatory periodic filings will be beneficial to investors.
Secondly, the ETF products will be exchanged and listed on regulated national securities markets. The SEC will keep a careful eye on regulated exchanges to make sure they are following the regulations to avoid manipulation and fraud.
Multiple investment firms have submitted applications to the SEC to establish spot Bitcoin ETFs. Currently, the SEC is finishing up its evaluation of registration statements for 10 spot Bitcoin ETPs. With this, issuers will be on a level playing field, and investors and the market as a whole will reap the benefits of increased fairness and competitiveness in the marketplace.
Not all are on board
Despite thousands of crypto enthusiasts and investors hailing the ETF approval, skeptics have criticized it as the legalization of a product that could expose investors to massive risks. Many critics of crypto insist that digital assets are “inherently worthless”, with no underlying backing and susceptible to manipulation.