An historic regulation change has been granted by the U.S. Securities and Exchange Commission (SEC) to enable the first spot Bitcoin exchange-traded funds (ETFs) to start trading. After over a decade of relentless work and many denials from the SEC, the clearance marks a significant milestone in the Cryptocurrency industry.
The rule change document initially appeared for a brief period of time on the regulator’s website before subsequently vanishing, thereby exacerbating the confusion that ensued after the false alarm yesterday. Later, however, the document was re-added, assuaging the concerns of cryptophiles. The 19b-4 applications submitted by ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton were approved by the securities regulator on January 10. These applications sought rule changes that would permit the listing and trading of spot Bitcoin ETFs on the respective exchanges.
Following the news of approval, Franklin Templeton added laser eyes to profile picture.
#NewProfilePic pic.twitter.com/OZTfkehgUa
— Franklin Templeton (@FTI_US) January 10, 2024
Historic approval enables the first regulated exchange-traded product in the United States to provide direct exposure to the Bitcoin price for investors, eliminating the need to purchase the cryptocurrency or concern themselves with self-custody. Investing capital will be invested in ETFs that contain Bitcoin as their underlying asset.
After careful review, the [SEC] finds that the proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange.
the commission wrote in the approval notice
The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order). The court therefore vacated the Grayscale Order and remanded the matter to the Commission. Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares.
Gary Gensler, chairman of the SEC, cited a judgment loss in 2023 as one of the reasons the organization approved the dozen or so filings on Wednesday.
The authorization for the ETF was granted over a decade after Cameron and Tyler Winklevoss initially submitted their proposal to establish the Winklevoss Bitcoin Trust in 2013. Consistently, the SEC denied all petitions for spot Bitcoin ETFs, citing potential market manipulation and fraud concerns. In August 2023, however, Grayscale prevailed in a court case that reversed the SEC’s initial denial of its application to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF, compelling the SEC to reconsider its stance.
