A new era of crypto trading is expected to begin today after the S.E.C. finally approved creating new exchange-traded funds that would allow investors to buy and sell Bitcoin more easily. Yesterday, the regulator authorized 11 fund managers — including the Wall Street fund giants BlackRock and VanEck and smaller companies like GrayScale and Valkyrie — to begin offering the new crypto investment products. In anticipation of the decision, the companies have aggressively cut their management fees to gain an early advantage. “The fundamental change is a lot more money is coming into this asset class,” Paul Grewal, the chief legal counsel of the crypto exchange Coinbase, told DealBook. Matthew Sigel, the head of digital asset research at VanEck, called it a “historic” moment. Bitcoin hit a 21-month high this week as crypto boosters shrugged off a series of high-profile bankruptcies and a sweeping legal crackdown against some of the most prominent players in the sector. That said, the cryptocurrency’s price barely budged this morning, trading below $47,000, giving the digital token a market value of roughly $920 billion. How big could the market get? Unsurprisingly, crypto buyers and those offering the Bitcoin ETFs think the potential is limitless. Grewal said investors could pour billions of dollars and trillions of dollars into digital asset markets in the short term and over time. But even some outside the sector see reason for growth. “We anticipate further price increases in the current year,” the Deutsche Bank researchers Marion Laboure and Cassidy Ainsworth-Grace wrote a note to investors today. They added that a flood of institutional investors and expected new crypto-trading regulation, including in the European Union, could bolster the market for digital assets. The S.E.C. approval gives crypto a stamp of legitimacy. Gary Gensler, the S.E.C. chair and a frequent critic of the asset, said the new Bitcoin investment products would feature familiar investor protections. For instance, the fund providers will have to file public registration statements and periodic financial filings, But he warned that the approval was not an endorsement. “Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity, including ransomware, money laundering, sanction evasion, and terrorist financing,” he said in a statement. Cathie Wood, one of Bitcoin’s most vocal champions whose firm won approval yesterday for a Bitcoin E.T.F., said Gensler had “denigrated” the sector. Is an Ethereum fund next? The industry and its lobbyists in Washington believe that the Bitcoin E.T.F. approval will lead to similar funds for other cryptocurrencies. VanEck has a pending application for an E.T.F. tied to Ethereum, the second-largest crypto asset by market capitalization.
Bitcoin bulls join forces with Wall Street.
