The US Securities and Exchange Commission (SEC) has approved 11 Bitcoin spot exchange-traded funds (ETFs) in a "watershed" moment for cryptocurrency investing, filings on its website showed last night. The ETFs can start trading as early as today, Thursday.
It comes a mere 24 hours after the SEC posted an "unauthorised" approval on X (formerly Twitter), which SEC Chair Gary Gensler then said was a result of the account being "compromised" by a person or entity.
The decision ends a decade-long fight over the listing of exchange-traded Bitcoin products on national stock exchanges, and could serve as a tailwind for the price of the world's most popular digital asset.
Bitcoin (BTCUSD) was mostly flat at around $46,742 following the SEC announcement, according to CoinDesk data. The price had briefly risen 2% after the false tweet, before ffalling once more.
The approved ETFs are the Grayscale Bitcoin Trust GBTC; Bitwise Bitcoin ETF; Hashdex Bitcoin ETF; Blackrock's iShares Bitcoin Trust; Valkyrie Bitcoin Fund; ARK 21Shares Bitcoin ETF; Invesco Galaxy Bitcoin ETF; VanEck Bitcoin Trust; WisdomTree Bitcoin Fund; Fidelity Wise Origin Bitcoin Fund; and the Franklin Bitcoin ETF.
Spot Bitcoin: Years of Attempts
The approval follows years of failed attempts by ETF sponsors to list a spot Bitcoin product. Regulators have repeatedly blocked the move, arguing the markets on which Bitcoin trades are so unregulated and vulnerable to manipulation that average investors cannot be protected from fraud. A decision on Bitcoin spot ETFs, was, however, due this week, with a Wednesday deadline.
Last August a federal judge ruled the SEC's reasons for denying an application by Grayscale Investments to list a bitcoin ETF were "arbitrary and capricious" and in violation of federal administrative law.
In the ruling, the judge argued the SEC's decision to approve two Bitcoin futures funds but deny a Bitcoin spot ETF was a breach of the legal principle that agencies "must treat like cases alike" because prices in the Bitcoin futures market closely tracked those of its spot market counterpart.
The SEC had first approved a Bitcoin futures ETF in late 2021, arguing Bitcoin spot markets could not be sufficiently monitored to prevent fraud, while Bitcoin futures markets were overseen by registered futures exchanges with sophisticated surveillance capabilities.
Why Did The SEC Change its Mind on a Spot ETF?
Announcing this latest decision, Gensler pointed to the court ruling as reason for the commission reversing its stance, saying "circumstances have changed", and that the agency's prior rationale for blocking the ETF was no longer sufficient.
"Based on these circumstances (...) I feel the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETFs," he said.
However, he also said the decision would lead to a blanket policy of approving products.
"Today's Commission action is cabined to ETPs holding one non-security commodity: Bitcoin," Gensler said.
"It should in no way signal the Commission's willingness to approve listings standards for crypto asset securities."
Nor does the decision "signal anything" about the Commission's stance on cryptocurrencies more broadly, he said – or the "current state of non-compliance of certain crypto asset market participants with federal securities laws."
Expect Reaction to the SEC Green Light
The development has been met with a mixture of praise and alarm.
Yoni Assia, chief executive and co-founder of trading platform eToro, says it's a watershed moment for Bitcoin investors.
"The term 'watershed moment' can be a cliche, but in the case of today's Bitcoin ETF news, it could not be more justified," he says.
"Today's news provides an answer for institutional demand for Bitcoin. It's good news for crypto markets and supportive of our belief that Bitcoin is an unstoppable technology. It is digital gold and, taking a long-term view, I believe it represents the intersection of finance, economics and technology.
"For our users, retail investors, today's news is positive as it will be supportive of the growth of Bitcoin as an asset class, but I believe the majority of ordinary investors will want to continue to buy and hold real Bitcoin."
Will We Get Bitcoin ETFs in the UK?
However, Jason Hollands, managing director at retail investment platform Bestinvest, warns Bitcoin enthusiasts among the UK's nine million self-directed investors might be waiting for a while if they want a similar decision in the UK.
"The Financial Conduct Authority (FCA) has repeatedly flagged concerns about the extreme volatility of crypto assets, the high risk of losses and the difficulties retail investors face in valuing them," he says.
"For an ETF to be made directly available by a UK regulated investment platform, under a regulation known as 'PRIIPs', ETF and other fund providers must comply with UK regulatory requirements in terms of producing a Key Information Document, which a US-listed ETF won't have."
Were similar ETFs to become authorised in the UK, he adds, it is possible they would only be made available to professional investors because of the introduction of the FCA's Consumer Duty last year, which aims to increase consumer investor protections.
And Laith Khalaf, head of investment analysis at retail platform AJ Bell, is also sceptical about the timescale and likelihood of this happening here: “Although even with the SEC approval, it isn’t a slam dunk that we will get one over here because the UK regulator may not approve their sale."
He explains technical reasons why UK investors are not allowed to buy US ETFs, such as a lack of a Key Investor Document and the FCA's ban in 2021 on ETNs (Exchange Traded Notes) containing "unregulated transferable cryptoassets".
“However, the UK regulatory landscape is also shifting, with crypto activities being brought under the supervision of the FCA, so this may pave the way for crypto ETFs at some point in the future. If or when that might happen is anyone’s guess. The FCA is walking a bit of a tightrope here between keeping consumers safe and the government’s ambition to make the UK a global hub for cryptoasset technologies."
But he argues that investment managers are still interested in packaging Bitcoin ETFs into a product of investors becauseof the large consumer demand.
Morningstar's Sunniva Kolostyak contributed to this story
