The Securities and Exchange Commission voted Wednesday to allow Wall Street firms to offer more accessible ways to buy and sell bitcoin on financial markets. This significant decision could lead to the cryptocurrency becoming more mainstream just over a year after the crypto markets crashed.
Banks and investment firms can now sell exchange-traded funds, or ETFs, that own Bitcoin to regular consumers. Before, investors had to go through cryptocurrency trading firms like Coinbase that charged transaction fees or had to buy financial products that tried to approximate the price of bitcoin in more roundabout ways. Now, retail investors can buy the bitcoin ETFs like they might buy a public company’s stock or a mutual fund.
The move could remove some of the stigma that has clung to Bitcoin for years, especially after high-profile cryptocurrency scams and business failures, and make it an even more common part of regular people’s investment and retirement portfolios.
The crypto industry hailed the decision as a significant victory.
“This is a monumental step for the crypto industry,” Coinbase CEO Brian Armstrong said in an interview with CNBC. Armstrong and other crypto leaders had criticized the SEC for not being more open to Bitcoin and other cryptocurrencies.
For years, the SEC had rejected similar applications for bitcoin ETFs. But last year, a federal court ruled that the regulator had not sufficiently explained its reasons for rejecting an application by crypto asset manager Grayscale to list a bitcoin ETF. Wednesday’s decision came in response to that ruling, SEC Chair Gary Gensler said in a statement.
“Based on these circumstances … I feel the most sustainable path forward is to approve the listing,” Gensler said.
Bitcoin is already far and away, the most stable and popular cryptocurrency. Even after the crypto crash at the end of 2022, its price remained high relative to other crypto assets. As the first significant cryptocurrency, it has had a more extended history, and investors are more comfortable buying it than a seemingly endless number of newer and lesser-known cryptocurrencies.
The industry is still rife with scams, and Bitcoin is used constantly by criminals seeking to move money without being blocked by governments. The day before the SEC’s announcement, its account on X, formerly Twitter, was compromised, and an announcement was sent out approving the bitcoin ETFs prematurely, leading to a short spike in the cryptocurrency’s price.
The crash of crypto prices in 2022 after they rose massively during the pandemic and the conviction of crypto exchange FTX’s founder Sam Bankman-Fried for fraud have cast a shadow on the industry. Still, millions of Americans own bitcoin as an investment and see it as another way to diversify their portfolios.
“This asset class is here to stay,” Armstrong said.