The US securities regulator on Wednesday approved the primary US-listed exchange traded funds to trace bitcoin, its Chair Gary Gensler said, in a watershed for the world’s largest cryptocurrency and the broader crypto industry.
The agency approved applications, including from BlackRock, Ark Investments, 21Shares, Fidelity, Invesco, and VanEck, amongst others, based on a notice on its website.
Some products are expected to start trading as early as Thursday.
The products — a decade in the making — could be a game-changer for bitcoin, offering institutional and retail investors exposure to the world’s largest cryptocurrency without directly holding it, and a significant boost for a crypto industry beset by a string of scandals.
Standard Chartered analysts this week said the ETFs could draw $50 billion to $100 billion this 12 months alone, driving the worth of bitcoin as high as $100,000.
Other analysts have said inflows shall be closer to $55 billion over five years.
“It’s an enormous positive for the institutionalization of bitcoin as an asset class,” said Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. “The ETF approval will further legitimize bitcoin.”
Bitcoin was last up 2.13% at $46,924. Some analysts had noted that the market could have already priced in the news of approval – bitcoin had soared greater than 70% in recent months on growing anticipation of an ETF, and hit its highest level since March 2022 earlier in the week.
A green light marks a U-turn for the SEC, which for a decade rejected bitcoin ETFs resulting from worries they may very well be easily manipulated. SEC chair Gensler can be a fierce crypto skeptic.
Hopes the SEC would finally approve bitcoin ETFs surged last 12 months after a federal appeals court ruled that the agency was fallacious to reject an application from Grayscale Investments to convert its existing Grayscale Bitcoin Trust (GBTC) into an ETF. That ruling forced the agency to re-examine its position.
In an announcement, Gensler said that in light of the court ruling, approving the products was “probably the most sustainable path forward,” but added the agency didn’t endorse bitcoin, which is dangerous and volatile.
The crypto industry celebrated the news.
“Like a lot of Grayscale’s future-forward investors, we believed that bitcoin could change the world, and we were and remain excited on the prospect of democratizing access to this asset through a US regulated investment vehicle,” said Grayscale CEO Michael Sonnenshein.
Douglas Yones, head of exchange traded products on the Recent York Stock Exchange, where some products shall be listed, said the approval was also a vital “milestone” for the ETF industry.
The approvals come a day after an unauthorized person published a fake post on the SEC’s account on social media platform X, saying the agency had approved the brand new products for trading. The agency quickly disavowed and deleted the post.
On Wednesday it said it’s coordinating with law enforcement including the Federal Bureau of Investigation and the SEC’s own internal watchdog to research the incident.
Further confusion ensued on Wednesday afternoon when the SEC posted a notice on its website appearing to indicate that the ETFs had been approved but then removed it, only to repost it again.