Federal regulators voted Wednesday that ordinary American investors can buy and sell bitcoin like they trade stocks.
The move opens up bitcoin investing to a larger swath of the American public, including potential investors who never entirely understood what bitcoin is or how it works, let alone how to buy and sell it. Trading began in earnest on Thursday.
The vote, taken by the U.S. Securities and Exchange Commission, allows the sale of exchange-traded funds, or ETFs, to the public.
Before now, everyday investors who wanted to trade digital currencies generally had to go to crypto exchanges, a potential deal-breaker for people unfamiliar with Bitcoin.
SEC approves bitcoin ETFs, clearing the way for public trading
For the uninitiated, ETFs are an investment vehicle akin to a mutual fund. They are traded on exchanges and typically track a specific index or “basket” of stocks, bonds, or commodities. They function like stocks, with prices changing throughout the trading day, whereas mutual funds trade once daily at a single price.
Anticipation for the SEC vote drove up the price of bitcoin, which is notoriously volatile. The currency traded above $47,000 on Thursday, according to Coindesk, up from around $17,000 at the start of last year.
“Today is a monumental day in the history of digital assets,” said Samir Kerbage, chief investment officer at a bitcoin ETF issuer called Hashdex, in a statement quoted in The Wall Street Journal.
According to Reuters, the new ETFs will be listed on Nasdaq, the New York Stock Exchange, and the Chicago Board Options Exchange, which are all highly regulated exchanges.
Investing in a bitcoin ETF will allow investors to reap potential profits from bitcoin without the attendant risks of owning bitcoin directly, Reuters said.
The federal securities agency had rejected prior bids for publicly traded bitcoin ETFs on fears that bitcoin is susceptible to manipulation and fraud. The industry has sought ETF trading for more than a decade.
Bitcoin ETFs cleared for trading include Vanguard, BlackRock
The applications approved Wednesday came from 11 issuers, including big-name investment firms like BlackRock and Fidelity.
Two of five SEC commissioners voted against the decision. One of them, Democrat Caroline Crenshaw, called the vote “unsound and ahistorical” in a statement.
Public trading of bitcoin funds marks “the beginning of a world where it can be part of every portfolio,” said Nathan McCauley, CEO and co-founder of the crypto platform Anchorage Digital, speaking to Investor’s Business Daily.