The Securities and Exchange Commission (SEC) has approved Bitcoin exchange-traded funds (ETF) less than 24 hours after false reports that it had already done so. It’s been a big week for cryptocurrency fans.
SEC chairperson Gary Genser announced the agency’s approval of Bitcoin ETFs via the agency’s official website on Wednesday. ETFs are bundles of distinct securities that can be traded on the stock market together in one lot, diversifying your investment to minimize risk. Now, investors can purchase ETFs that include Bitcoin, allowing them to invest in the cryptocurrency without buying it directly.
It should be noted that these are spot ETFs, which hold Bitcoin, as opposed to futures ETFs, which track Bitcoin prices through futures contracts.
However, this SEC approval doesn’t mean the floodgates are now open for all cryptocurrencies on the stock market; only 11 specific Bitcoin ETFs have been approved, including BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust.
“Importantly, today’s Commission action is cabined to [exchange traded products] holding one non-security commodity, bitcoin,” said Genser. “It should not signal the Commission’s willingness to approve listing standards for crypto asset securities.”
Wednesday’s news is a significant step forward for crypto enthusiasts, who had been hoping that SEC approval would help legitimatize cryptocurrency and encourage new investors.
However, though Bitcoin ETFs have been approved, Genser emphasized that this does not mean the SEC endorses cryptocurrency. He seemed apprehensive of Bitcoin, stating that other assets such as metals have apparent consumer and industrial uses, “in contrast, bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
Genser further stated that the SEC does not evaluate the merits of the assets in an ETF and is obliged to approve filings if they comply with the relevant laws and the agency’s rules.
“While we approved the listing and trading of certain spot bitcoin [exchange traded product] shares today, we did not approve or endorse bitcoin,” said Genser. “Investors should remain cautious about the risks associated with bitcoin and products whose value is tied to crypto.”
The announcement came just one day after a fake post from the SEC’s hacked Twitter/X account claimed approval for Bitcoin ETFs had already been granted. This briefly caused Bitcoin’s value to fluctuate, shooting up at the false news before dropping back down when it was corrected.
The SEC has previously said that any announcements, such as the approval of Bitcoin ETFs, would be published on its website before being listed on the Federal Register rather than being first revealed on social media. The agency is currently working with the FBI to investigate the hack.