US SEC Approves Bitcoin ETFs In Historic Move

Alex Cheong Pui Yin

11th January 2024 - 3 min read

In a landmark decision, the US Securities and Exchange Commission (SEC) has approved the first US-listed exchange traded funds (ETFs) to track cryptocurrency Bitcoin, which is set to revolutionise the crypto and traditional finance sector.

With this, more than 10 different firms are set to launch their funds, with some major names being BlackRock, Ark Investments, 21Shares, VanEck, and Invesco. Additionally, Grayscale Investments – which had previously applied to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, but was rejected by the SEC – may also now finally be able to do so. Some of these funds are ready to begin trading as soon as the next day.

In a statement, the SEC Chair, Gary Gensler explained that while the Commission had disapproved more than 20 exchange rule filings for spot Bitcoin exchange traded products (ETPs) between 2018 to 2023, circumstances have now changed. He also elaborated said that the SEC had previously been concerned that these ETPs can be easily manipulated, but a federal appeals court ruling in 2023 that judged the Commission to be at fault for arbitrarily rejecting Grayscale Investments’ ETF conversion application has forced it to re-examine its position.

“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares,” Gensler said, although he also stressed that this decision does not in any way signal the Commission’s endorsement of the cryptocurrency.

Despite that, the approval has raised optimism among investors, especially since this could increase Bitcoin’s accessibility and legitimacy after a decade of opposition from the SEC. It could also help to temper existing public scepticism that arose from several crypto-related scandals, such as the conviction of FTX founder Sam Bankman-Fried and Binance founder Changpeng Zhao’s admission of guilt to a number of federal charges.

The chief executive officer of Grayscale Investments, Michael Sonnenshein, for instance, celebrated the news and said that he remains “excited at the prospect of democratising access to this asset (Bitcoin) through a US-regulated investment vehicle”.

Similarly, chief executive officer of Ark Invest, Cathie Wood said that the SEC approval is “a green light for institutions”. “We’ve been talking to quite a few of them, and they’re much more interested now that the SEC effectively is paving the way,” she said. For context, Ark Invest has partnered with 21Shares for a proposed Bitcoin fund.

In terms of the price movement of cryptocurrencies, the anticipation of the SEC’s approval had boosted the price of Bitcoin in recent months, with the digital currency pushing past US$47,300 (approximately RM219,000) just a few days ago. Following the confirmed news, Bitcoin hovered at about US$46,600; as of the time of writing, it is trading at US$ 46,407. Meanwhile, Ether soared up to US$2,606 (approximately RM12,095), its highest level since May 2022.

The SEC approval also officially came a day after the SEC’s X social media account was hacked, with an unauthorised person publishing a fake post to say that the agency has approved the new products for trading. This led to a premature bout of wild swings in the crypto market, involving a combined value of US$40 billion.

(Sources: SEC, Malay Mail, CNBC)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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