Several exchange-traded funds (ETFs) linked to the spot price of bitcoin are set to commence trading in the U.S. this Thursday, marking a significant milestone for the crypto industry.
The approval from the U.S. Securities and Exchange Commission (SEC) was granted late on Wednesday, giving the green light to 11 ETFs after extensive negotiations with major asset managers, including BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, Reuters reported.
BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust wasted no time and began trading in the early pre-market hours., while The VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, and ARK 21Shares Bitcoin ETF are expected to join the trading arena soon.
This regulatory approval is anticipated to trigger intense competition among issuers, with fees for these products already slashed well below the standard in the U.S. ETF industry. The move signals the beginning of a new era as the crypto industry gains broader acceptance and market participation.
According to analysts, the development will have several significant impacts on the industry, including the price of Bitcoin. It will also provide a regulated investment vehicle, which traditional investors can leverage to enter the market.
“The impact of this approval can’t be understated: it’ll shoot up the BTC price, get institutional capital flowing in, and drive an uptick in the exchange user base. Also, more mainstream investors will explore all avenues to gain exposure to the nascent asset class.” said Ryan Lee, research chief analyst at global crypto exchange Bitget.
Additionally, with the Bitcoin ETF and the new set of buyers it will bring, there will be a higher demand for innovation to meet the high standards these traditional investors might place on the market.
“This will generally boost the industry’s evolution and position it to leverage unique opportunities moving forward. In all, the approval of a Bitcoin ETF will make the industry more adaptable to regulations, creating diverse products that cater to different segments of the global financial industry,” Lee tells IT Logs.
The lengthy process went through a bit of a confusion at the beginning of the week, after the SEC confirmed it had not approved bitcoin ETF applications – contradicting its X account which briefly stated otherwise, prompting a spokesperson for the institution to explain that there had been an “unauthorized access by an unknown party.”
For many industry players, these mistakes haven’t gone unnoticed.
“Bitcoin ETF approvals in the US are another important milestone for bitcoin and its underlying technology. It is a huge achievement for the legitimacy of crypto assets and our industry in general. We have also witnessed so some level, a loss of legitimacy with one of the most important government agencies as they made childish mistakes over the last days, that confused the investors and the industry. Mistakes like that should not happen on that level.” Dejan Davidovic, chief operating and integrity officer at crypto exchange Kriptomat, wrote in a LinkedIn post.
However, there are also those that are hesitant regarding the development, such as lawyer and chairman of the Croatian Union for Blockchain & Cryptocurrencies (UBIK).
“From Gensler’s “disclaimer” you can tell they still hold same contempt towards crypto, it’s just that they’re arm was twisted by the TradFi behemoths. It’s understandable that everyone is looking forward to price surge should it happen but ETFs are everything what crypto wasn’t suppose to be – you pay a fee to BlackRock for them to hire another centralized entity to hold your bitcoins. This set up will naturally have it’s audience but it couldn’t be further from Web3 values – decentralization, transparency, user control over data and trustlessness.” Hrdalo tells IT Logs.
On the other hand, analysts are now also estimating that bitcoin ETF flows will build up gradually to cross $10 billion in 2024, and will make efforts to reach $80 billion by the end of next year. Furthermore, granting the bitcoin ETF does not mean that the SEC is promoting the cryptocurrency, as the financial institution also called for individual investors to be cautious when investing in digital assets, Arvin Kamberi from the Serbian Bitcoin Association points out.
“This is a clear distinction between ‘technology regulation’ and ‘consumer protection’ regulation. The US did not go into technology regulation but enabled the products that placed this new tech into known frameworks. Another essential aspect is related to cybersecurity issues. Considering that cryptocurrency use and safe storage still require particular technical knowledge, the ETF offers the opportunity for individual investors to invest directly in the cryptocurrency markets without the risk associated with cybersecurity,” Kamberi said in a statement for IT Logs.
