• SEC releases Bitcoin spot ETFs
• Offer in Europe still limited
• Strong signaling effect for Bitcoin
SEC Approves Bitcoin Spot ETFs
What takes a long time is finally good: After the US Securities and Exchange Commission (SEC) resisted the introduction of a spot ETF that tracks Bitcoin for a long time, the authority headed by Gary Gensler has now given in and approved 13 Applications for relevant financial products.
“Since Jay Clayton’s chairmanship in 2018 and through March 2023, the Commission has rejected more than 20 exchange rule applications for spot Bitcoin ETPs. One of these applications, submitted by Grayscale, saw the conversion of the Grayscale Bitcoin Trust into a ETP. […] “We are now faced with a new series of applications that are similar to those we have rejected in the past,” Gensler commented in a letter on the previous rejections. “However, circumstances have changed.” The SEC gave the reason for the change of heart -Chief cited a ruling by the US Court of Appeals that the SEC Commission did not provide sufficient reasons for rejecting Grayscale’s application. “Given these circumstances and the circumstances further explained in the approval order, I believe it is the most sustainable course of action “to authorize the listing and trading of these spot Bitcoin ETP shares,” Gensler continued.
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Green light for eleven spot ETFs
With this, the authority not only approved the conversion of the Grayscale Bitcoin Trust into a spot ETF, but also allowed trading of the Bitwise Bitcoin ETF, the Hashdex Bitcoin ETF, the iShares Bitcoin Trust, the Valkyrie Bitcoin Fund, the ARK 21Shares Bitcoin ETF, the Invesco Galaxy Bitcoin ETF, the VanEck Bitcoin Trust, the WisdomTree Bitcoin Fund, the Fidelity Wise Origin Bitcoin Fund and the Franklin Bitcoin ETF, according to an SEC filing. All of these funds are spot ETFs, meaning they directly track the current Bitcoin price. The managers of the financial products also actually buy Bitcoin shares. This distinguishes the concept from future ETFs, which represent futures transactions and consist of cash deposits and a derivative that increases or decreases according to the price of the cryptocurrency. Such funds have been tradable in the USA for some time. The first of its kind was the ProShares Bitcoin Strategy ETF, which made it to Wall Street in October 2021.
Narrow offering in Europe
The spot ETFs recently approved by the SEC are currently only tradable in the USA, although some US funds are often also launched in Ireland and are therefore also available to investors in Euroland. However, it is unclear whether and when this will be implemented for the new Bitcoin ETFs. In Europe, a comparison product, the Jacobi FT Wilshire Bitcoin ETF, was launched in August 2023. The spot ETF launched by Jacobi Asset Managemet is intended to offer a “regulated, trusted and ESG-responsible approach to investing in digital assets”, but is currently reserved for professional investors. In addition, the fund was issued on the self-governing Channel island of Guernsey, but can be traded via EURONEXT in Amsterdam. In addition, so-called Exchange Traded Notes (ETNs) have been permitted in Europe since 2018, which reflect Bitcoin on a spot basis, but in which only debt security is purchased and there is no direct exposure to the shares.
Bitcoin ETFs make it easier to get started
And even if the investment opportunities for European investors are currently limited, the SEC’s decision should still play into the hands of the crypto veteran. According to “CBS News”, the spot ETFs could lower the inhibition threshold for investments in the USA, as the funds can be traded on well-known exchanges without the need for a wallet. In addition, providers such as BlackRock and Fidelity are familiar to traders and also exude a certain degree of trust, while crypto exchanges may initially arouse skepticism among many investors. In general, experts expect increasing demand for Bitcoin, which in turn should drive up the price of the cyber currency.
Strong signaling effect for the crypto market
The long-term success of Bitcoin could, above all, be ensured by the signaling effect of Gensler’s decision, the news channel continued. This means that the cryptocurrency, which is repeatedly criticized by authorities and investigators due to possible money laundering and terrorist financing, could lose its dirty image – or at least improve it. This could advance the effort to use the coin for investments, payments and other business purposes, so that Bitcoin could actually emerge as an alternative to the traditional banking system, as the cryptocurrency’s inventor, Satoshi Nakamoto, stated in his white paper from October 2008 had planned.
And if the SEC’s decision helps make Bitcoin attractive as an investment product to more groups of investors, investors in Europe should also benefit.
Editorial team finanzen.net
Image source: K.unshu / Shutterstock.com, Wit Olszewski / Shutterstock.com
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