SEC Approves 11 Bitcoin ETFs, Paving the Way for a New Era for Cryptocurrencies

The Securities and Exchange Commission (SEC) has officially approved the first Exchange Traded Funds (ETFs) on Bitcoin, after denying authorization for 11 years.

The approval comes after a period of uncertainty during which the SEC rejected more than 20 similar requests, but a key change occurred following a court ruling that the SEC had not adequately justified its rejection of a proposed ETP from Grayscale.

Approved ETFs include Grayscale Bitcoin Trust, Bitwise Bitcoin ETF, Hashdex Bitcoin ETF, iShares Bitcoin Trust, Valkyrie Bitcoin Fund, ARK 21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Fund, Fidelity Wise Origin Bitcoin Fund, Franklin ETF Bitcoin

Additionally, most issuers have submitted acceleration requests, allowing them to launch the funds simultaneously on January 11th.

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A historic event

The SEC approval is a historic event for the cryptocurrency market. It represents recognition by the United States’ top financial regulator of the potential of cryptocurrencies as an investment asset.

However, SEC Chairman Gary Gensler said in a statement that the approval does not constitute an endorsement of Bitcoin or the cryptocurrency industry in general. And he added that the SEC continues to believe that Bitcoin and cryptocurrencies are risky and volatile assets.

However, the approval of Bitcoin ETFs is an important sign that the SEC is becoming more open to cryptocurrencies. The approval of Bitcoin ETFs is therefore likely to pave the way for more widespread adoption of cryptocurrency-related financial products, offering investors new opportunities and diversification options.

The correlation between futures and the spot market was a key factor in the approval

The SEC said it approved Bitcoin ETFs based on a number of factors, including market liquidity, price transparency and the ability to mitigate risks of fraud and manipulation.

A critical aspect of the Commission’s decision was the analysis of the correlation between the Bitcoin futures market and the Bitcoin spot market. The analysis revealed consistently high correlation, suggesting that surveillance of the futures market would indeed include relevant activities in the spot market.

This correlation represents a key factor in mitigating the risks of fraud and manipulation and marks a change in the position of the regulator who previously claimed denied the existence of this correlation.

Bitcoin ETFs Could Accelerate Cryptocurrency Adoption

The approval of Bitcoin ETFs is likely to pave the way for more widespread adoption of cryptocurrency-related financial products, offering investors new opportunities and diversification options.

ETFs could indeed make cryptocurrencies accessible to a wider audience of investors and could help reduce the volatility of the cryptocurrency market, making it more attractive to institutional investors.

While it is still early to determine the real impact of the approval of Bitcoin ETFs on the cryptocurrency market, it is certainly an important step in the evolution of cryptocurrencies as an investment asset.

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(Featured image by Traxer via Unsplash)

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