Bitcoin ETFs receive ‘nod of approval’ from US regulators
Spot bitcoin exchange-traded funds (ETFs) have been approved by the US Securities and Exchange Commission (SEC), marking a “watershed” moment for the digital currency.
Announced by SEC chairman Gary Gensler, 11 spot bitcoin ETFs have now been deemed effective for listing and trading on CBOE, the New York Stock Exchange and Nasdaq.
This includes BlackRock’s iShares Bitcoin Trust, Fidelity Wise Origin Bitcoin Trust and the VanEck Bitcoin Trust, alongside nine other issuers.
While the US regulatory body has previously disapproved of the digital asset class in the past, Gensler described that approving bitcoin ETFs is the “most sustainable path forward”.
However, Gensler warned: “Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing.
“While we approved the listing and trading of certain spot bitcoin ETF 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.”
According to Justin Arzadon, Betashares head of digital assets, the SEC’s green light represents a “watershed day for the maturity of bitcoin”.
“The SEC’s approval of spot bitcoin ETFs should add further confidence to the digital asset ecosystem and could pave the way for Wall Street to move deeper into cryptocurrencies as an asset class,” he said.
“While traditional finance has talked a big game about moves into digital assets, the reality has been more mixed in the wake of continued volatility for the sector. The decision by the SEC is expected to provide further confidence and legitimacy to the digital assets ecosystem.”
Moreover, US-based investors can now invest in bitcoin through a familiar ETF structure, rather than navigating unregulated exchanges.
Arzadon added: “The anticipated flows into US-traded spot bitcoin ETFs in the initial days after launch are expected to be significant and would serve as an endorsement of the global investor preference for ETFs over other investing structures.”
The digital assets head also warned investors to not get ahead of themselves when allocating towards the asset class, which still remains highly volatile.
“Depending on their circumstances, investors might then consider including a small allocation to digital assets within the alternatives component of their portfolio,” he said.
Global X ETFs also welcomed the decision as it marks a significant milestone for the cryptocurrency market alongside growing confidence from international regulators.
Evan Metcalf, chief executive of Global X ETFs Australia, commented: “The SEC’s approval affirms the maturation of the cryptocurrency space, strengthening its position as a legitimate and promising avenue for investors.
“This decision aligns with our vision of broader global acceptance of digital assets and addresses the escalating demand for investment opportunities in the cryptocurrency sector.”
Metcalf expects a period of heightened demand for these types of digital assets, particularly in the Australian market.
The ETF product provider was the first to launch spot bitcoin and Ethereum ETFs in the APAC region, with the Global X 21Shares Bitcoin ETF and the Global X 21Shares Ethereum ETF being the only spot cryptocurrency ETFs in Australia.
Click here to read about the move will affect financial advisers in Australia.
AUTHOR
Jasmine Siljic
Recommended for you
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
Responsible investment performance concerns have lessened as the market hits $1.6 trillion in AUM, according to RIAA’s annual report, but greenwashing fears among asset managers are on the rise.
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
