US SEC approves Bitcoin ETF to drive crypto adoption

credit: Shutterstock
credit: Shutterstock

The US Securities and Exchange Commission (SEC) after months of deliberation has finally approved a Bitcoin ETF. 

The announcement was made yesterday in what is being viewed as a landmark victory for the cryptocurrency sector and its largest currency, with trading set to begin today. 

Some of the world’s largest asset managers, BlackRock and Grayscale, have been seeking regulatory approval for a Bitcoin ETF for the last several months, in particular spot ETFs, which enable an entity to hold an asset, such as Bitcoin, itself. 

Spot ETFs under the approved regulations set out by the SEC, its Chairman Gary Gensler stated that “sponsors of Bitcoin ETPs will be required to provide full, fair, and truthful disclosure about the products”. 

He continued in his statement: “Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, Bitcoin. It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities. 

“Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws. 

“As I’ve said in the past, and without prejudging any one crypto asset, the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws.”

Gensler has been a notorious figure in the crypto world due to his stance against the digital currency, believing it to be a non-compliant ‘wild west’ scene that provides volatile and serious risk to investors. 

Gensler, despite his stance against crypto, has settled a near 15-year wait from those in the sector calling for an ETF, which enables fairer access and more transparent trading of Bitcoin without directly owning the cryptocurrency. 

The SEC and its Chair did not go out without a fight, however, as they continuously turned down ETF efforts by Grayscale to convert its $26bn Grayscale Bitcoin Trust (GBTC) into a spot ETF, a case which was ultimately taken to court. 

The D.C Circuit Court of Appeals ruled in favour of Grayscale last August, finding that the SEC was “arbitrary and capricious” in its handling and rejection of the asset firms’ ETF requests. 

This ultimately set the ball rolling for the approval of the Bitcoin ETF, which will at least give the US financial regulator some oversight and clarity over crypto in the country. 

Gensler stated further: “Investors today 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, and, of course, through the Grayscale Bitcoin Trust.

“Since 2004, this agency has had experience overseeing spot non-security commodity ETPs, such as those holding certain precious metals. That experience will be valuable in our oversight of spot bitcoin ETP trading.

“While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”