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SEC Greenlights Historic Bitcoin ETFs, Bridging Wall Street to Crypto in Milestone Decision

TL;DR

  • SEC approves spot Bitcoin ETFs, bridging Wall Street and Bitcoin

  • Recent Grayscale ruling influences shift in SEC's stance

  • Eleven approved ETFs include major players like BlackRock and Fidelity

  • The culmination of efforts to legitimize Bitcoin for large-scale U.S. investors

  • Bitcoin trading at $45,937, down 0.9% in the last 24 hours

  • ETFs allow exposure to Bitcoin's price without direct cryptocurrency purchase

  • SEC mandates physical Bitcoin holdings by fund managers

  • Approval follows collaboration with SEC, incorporating cash transactions

  • Overturns previous rejections, influenced by court rulings for consistent treatment of similar cases.


The U.S. Securities and Exchange Commission (SEC) has made a groundbreaking decision by approving a series of spot Bitcoin exchange-traded funds (ETFs). This development establishes a financial connection between Wall Street and the leading cryptocurrency, Bitcoin.

The decision follows a history of denials, with more than 20 previous applications being turned down.


However, the recent court ruling on Grayscale prompted a shift in the SEC's stance. Commissioner Hester Peirce, a longstanding supporter of cryptocurrency, expressed support for the move, while Commissioner Caroline Crenshaw raised concerns about potential negative impacts on retirement accounts.


The approval encompasses all eleven spot Bitcoin ETFs, proposed by major entities such as BlackRock, Fidelity, Grayscale, VanEck, Bitwise, Franklin, Valkyrie, Hashdex, Ark Invest, WisdomTree, and Invesco Galaxy. This marks the end of a prolonged effort to legitimize Bitcoin within the United States, providing a secure and regulatory-compliant avenue for large-scale investors to enter the BTC market.


Bitcoin's market performance has been volatile, with the cryptocurrency trading at $45,937 at the time of this publication, reflecting a 0.9% decrease over the past 24 hours.


Spot Bitcoin ETFs track the performance of Bitcoin directly and are traded on the stock market. Notably, the SEC's approval requires fund managers to physically hold Bitcoin. Once these ETFs go live, investors will have a convenient way to gain exposure to Bitcoin's price movements without the need to directly purchase the cryptocurrency.


Applicants for Bitcoin ETFs collaborated with the SEC over several months to refine their proposals. In response to the SEC's requirements, they agreed to implement cash creations and redemptions in their ETF structures. Cash redemptions involve selling physical Bitcoin to distribute cash to shareholders, resulting in taxable transactions.


The SEC had previously approved Bitcoin futures ETFs, which share a similar structure to spot Bitcoin ETFs. However, this approach faced criticism, and in August, the D.C. Circuit Court of Appeals ruled that the SEC's rejection of Grayscale's application to convert its Grayscale Bitcoin Trust (GBTC) into a spot ETF was "arbitrary and capricious." The court emphasized the need for federal agencies to treat similar cases alike, ultimately paving the way for the recent approvals.


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