U.S. regulators approved bitcoin ETFs, dramatically broadening access to the 15-year-old cryptocurrency.
On Wednesday, the Securities and Exchange Commission declared the 19b-4 filings submitted by the New York Stock Exchange, Nasdaq, and Cboe Global Markets effective, allowing these markets to list and offer to trade in the securities as soon as Thursday. The 22-page document appeared on the regulator’s website before 4 p.m. ET (21:00 UTC), briefly disappeared, and reappeared, sowing confusion.
About a dozen companies, including BlackRock, Fidelity, and Grayscale, sought to create bitcoin (BTC) ETFs. Recently, they’ve announced – and, in some cases, slashed – the fees they plan to charge investors, suggesting a fierce battle to collect investors’ money is ahead. These are spot ETFs, meaning they hold bitcoin itself, versus the already-approved bitcoin futures ETFs, which hold derivatives contracts tied to BTC.
The green light from the SEC follows many years of delays and outright rejections of numerous attempts to launch spot bitcoin ETFs. It also comes just a few months after the agency was handed a resounding loss in court. In August, the D.C. Circuit Court of Appeals ruled the SEC was “arbitrary and capricious” in its decision to reject Grayscale’s attempt to convert its roughly $26 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF.
In a statement, SEC Chair Gary Gensler pointed to a court loss in 2023 as part of its impetus to approve the dozen or so filings on Wednesday.
“The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order). The court, therefore, vacated the Grayscale Order and remanded the matter to the Commission. Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” he said.
Advocates for a spot bitcoin ETF have long argued that a regulated trading product focused on the world’s oldest cryptocurrency would allow institutional and retail clients to gain exposure to bitcoin’s price movements without requiring them to set up wallets or directly invest in the digital asset. ETF shares, for example, will be available to any U.S. investor with a brokerage account.
SEC Commissioner Hester Peirce, a longtime advocate for the digital asset industry, said the logic behind the regulator’s previous rejections for spot bitcoin ETF filings was “perplexing.”
“Although this is a time for reflection, it is also a time for celebration. I am not celebrating Bitcoin or Bitcoin-related products; what one regulator thinks about Bitcoin is irrelevant. I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs,” she said.
However, SEC Commissioner Caroline Crenshaw said she dissented from the approval order, saying “substantial evidence indicates” the bitcoin spot market is not safe from fraud or manipulation. She said that spot and futures products differ, disagreeing with the 2023 court judgment.
“Today, we rely on a questionable correlation between a disaggregated, unregulated spot market and a futures market that the SEC does not regulate. As I noted, we rest our laurels on the idea or hope that whenever fraud and manipulation in that underlying spot market occurs, it should hopefully become apparent in the surveillance of that futures market. I’m not convinced that such transparency will exist,” she said.
The SEC approval early this year became seemingly a sure thing toward the end of 2023. A flurry of meetings between the agency and the proposed ETF issuers, alongside numerous amendments to the applicants’ ETF S-1 filings, gave the applicants of “i’s” being dotted and “t’s” being c”i’s”d ahead of launch.”t’s” Arca, Cboe BZX and Nasdaq filed their final 19b-4 submissions at the end of last week, bringing the filings more in line with the amended S-1 filings submitted by the would-be ETF issuers, which also include companies Galaxy/Invesco, Ark and Franklin Templeton.
Earlier on Wednesday, brokerages like Fidelity and E-Trade began putting tickers tied to some of these ETFs onto their platforms.
With rising optimism about spot ETFs, the price of bitcoin shot from around the $27,000 level on Oct. 1 to over $45,000 at the start of 2024.
Shares of the Grayscale Bitcoin Trust (GBTC), the largest closed-end bitcoin fund that now has been granted to convert into an ETF, popped to $40, its highest price since December 2021, TradingView data shows.
Jenn Rosenthal, vice president for communications at Grayscale, said in a statement, “I am happy to confirm that the Gray”cale team has received necessary regulatory approvals to uplist GBTC to NYSE Arca, and we will share a press release with additional information shortly.”
Hashdex Chief Investment Officer S” mir Kerbage said it was “a monumental day in the history of “digital assets.”
The SEC initially published, then “eemingly deleted, an order approving the U.S.’s first spot bitcoin ETFs (exchU.S.’sraded funds) on Wednesday.