The US Securities and Exchange Commission (SEC) has approved Blackrock’s Bitcoin ETF, the first US spot Bitcoin ETF, which will allow 11 funds to begin trading as early as Thursday.
Citing changing circumstances, Gensler noted that the agency faced a set of filings “similar to those we have disapproved in the past”. The ruling will bed in certain protections for investors, the SEC said, with sponsors of bitcoin ETPs required to provide full, fair, and truthful disclosure about the products; products will be listed and traded on registered and regulated national securities exchanges; existing rules and standards of conduct will apply to the purchase and sale of the approved ETPs; the SEC is also reviewing a further 10 spot bitcoin ETPs simultaneously, which will help create “a level playing field” for issuers and promote fairness and competition, benefiting investors and the broader market.
Kathleen Brooks, research director at XTB, said: “This is a landmark move that has been more than a decade in the making. For some, this is considered the moment that cryptocurrency gains legitimacy and goes mainstream. In ETF form, bitcoin is now easier to trade and is more closely linked to regulated entities.”
“Some argue that the ETF could make bitcoin less volatile in the future. If institutions have a target amount of bitcoin in their portfolios, then they may be forced to sell if the price gets too high, and forced to buy if the price gets too low, in order to maintain their targets. This could reduce the impact of Bitcoin’s wild price swings. However, we would need to understand what the appetite is for crypto from institutional money before we can make these assumptions,” Brooks added.
The initial market moves in the Bitcoin/USD cross after the announcement, saw bitcoin’s price fall back below $45,500, at one point on Wednesday the price had been above $46,500.
“This could be a “buy the rumour, sell the fact” move from the markets,” Brooks noted. “Bitcoin has rallied by nearly 70% since October last year, so a lot of the good news about ETF status may have already been priced in.”
Gensler stressed that the SEC decision should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities, and noted investors can already buy and sell or otherwise gain exposure to bitcoin at a number of brokerage houses, through mutual funds, on national securities exchanges, through peer-to peer payment apps, on non-compliant crypto trading platforms.
Gensler said that the SEC will leverage its experience of regulating non-security commodity ETPs, such as those holding precious metals.”That experience will be valuable in our oversight of spot bitcoin ETP trading.”
But Gensler couched the decision with a warning: “Though we’re merit neutral, I’d note that the underlying assets in the metals ETPs have consumer and industrial uses, while in contrast bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
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