The US SEC approved the first spot market applications of Bitcoin ETFs. These are securities that track the price of Bitcoin (BTC), the premier cryptocurrency in the market.
With the approval, a landmark moment is made in cryptocurrency history. This brings a legal framework to Bitcoin, allowing more investors to have exposure to the digital asset.
The first applications for Bitcoin ETFs started with the Winklevoss brothers back in 2013, but were not approved. After some mishap on X, the SEC finally confirmed the first ETF approvals on January 10, 2024.
The following are the 11 ETFs that were approved with their respective ticker symbol.
Grayscale $GBTC
Hashdex $DEFI
Valkyrie $BRRR
Invesco $BTCO
Wisdom Tree $BTCW
Franklin $EZBC
Blackrock $IBIT
Fidelity $FBTC
Vaneck $HODL
Ark 21 $ARKB
Bitwise $BITB
Prior to the approval there was plenty of speculation about the ETFs. Many expected it to be approved, based on some insider information. Others did expect approval, but not in early 2024.
The Bitcoin ETFs are a financial instrument that will allow financial institutions (e.g. Blackrock, Grayscale) to buy Bitcoin and issue shares of stock to investors. This is with the help of authorized participants (e.g. JP Morgan Chase), who provide liquidity. The Bitcoin will then require a prime broker or custodian (e.g. Coinbase) that will provide and hold the BTC.
This gives institutions clear and legal access to BTC, as vehicles to financial instruments. Previously it was risky because of lack of regulations that could result in violations.
It also simplifies the process of investing in Bitcoin for traditional investors. Many are not as savvy when it comes to the technical details of holding a digital wallet and securing private keys.
The Bitcoin ETFs make it easier for these traditional investors, as the fund managers will handle everything for them. However, that means that these investors will not own the actual asset, just a share of it from the ETF.
Some investors actually do not mind having a fund manager custody the asset for them. Otherwise, those who want can purchase BTC directly without the need for a fund manager. Everyone has a choice to how they can gain from BTC.
This brings Bitcoin to Wall Street, which was unlikely just 10 years ago. Back then Bitcoin was viewed as "geek money" and not essential to the finance industry as a store of value or medium of exchange.
The views of many financial experts and fund managers have changed over the years, as they observed Bitcoin's phenomenal rise as a viable asset. The approvals of the Bitcoin ETFs are just the beginning as cryptocurrency enters mainstream finance.
(Photo Banner Credit: Ivan Babydov)
Disclaimer: This is an opinion piece and not financial advice. Bitcoin and cryptocurrency is not without risk. Please do your own research always for education and further understanding.
