In a historic move, a rule change was approved by the US Securities and Exchange Commission (SEC) that would permit the first spot Bitcoin exchange-traded fund (ETF) to start trading.
This approval is undoubtedly a massive milestone for the crypto industry, as it comes after a decade of numerous rejections by the SEC and is a result of persistent efforts.
The announcement
Initially, the regulator’s website had displayed the rule change document briefly before it disappeared and this led to confusion, particularly due to the false alarm a day earlier.
However, the document was added once more and this put all the paranoid crypto minds at ease. The regulator said that the SEC deemed the proposals in accordance with the Exchange Act.
The commission also added that due to the rule change, the NYSE Arca will be permitted to list the Grayscale Bitcoin Trust (GBTC) that has now been converted into a spot Bitcoin ETF.
Along with this ETF, it will also list the Hashdax Bitcoin ETF and Bitwise Bitcoin ETF, while the Valkyrie Bitcoin Fund and the iShares Bitcoin ETF of BlackRock will be listed on Nasdaq.
The Franklin Bitcoin ETF, Fidelity Wise Origin Bitcoin Fund, the WisdomTree Bitcoin Fund, VanEck Bitcoin Trust, the Invesco Galaxy Bitcoin ETF, and the ARK 21Shares Bitcoin ETF will be listed on Cboe’s BZX exchange.
The ETFs
It means that the US SEC has granted approval for all 11 eligible applicants to list their respective ETFs, which means they are eligible for trading on US exchanges.
An ETF is defined as an investment vehicle that traders can use for buying shares backed by Bitcoin, without them having to actually hold the crypto token.
US investors have been able to invest in Bitcoin futures ETFs for some time, but the SEC had held back on approving a spot ETF, as it would track the price of Bitcoin in real time.
The details
The notice regarding the rule change shed some light on the reservations that the regulator had about approving a spot Bitcoin ETF.
This includes surveillance-sharing agreements that would provide fund issuers, exchanges as well as the SEC access to extensive data that can be used for determining attempts of market manipulation.
The filing also highlighted some of the lingering concerns of the commissioners, such as the risk of ‘hacking’.
The Commission said that there were concerns about the possibility of the Bitcoin blockchain getting hacked, which means that the Bitcoin held by the Trusts could be vulnerable to ‘reverse hacking’.
The journey towards this milestone first started back in 2013 when Tyler and Cameron Winklevoss came up with the Winklevoss Bitcoin Trust.
But, in March 2017, the SEC officially turned down their proposal due to concerns about market volatility and potential risks for investors.
Subsequently, the regulator had turned down many other Bitcoin ETF proposals that had been submitted over the years.
In 2018, the SEC turned down nine applications for a spot Bitcoin ETF in a single day.