The Securities and Exchange Commission (SEC) has approved the first US-listed exchange-traded funds (ETF) to track Bitcoin in what is a landmark development.
The go-ahead has been given to 11 exchange funds for Bitcoin which will open the door to cryptocurrency for many new investors although there is still a considerable degree of skepticism from the authorities toward it, as reported by The Guardian.
On Tuesday, an X post from the SEC account appeared to confirm the approval of the ETFs, acting as a catalyst for a surge in the price of Bitcoin to the tune of more than $1000, but shortly after, a statement from the SEC intimated the social media account had been “compromised”, pouring cold water on the update.
The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024
However, that proved to be shortlived as the SEC approval was made official within 24 hours, but with the news came some warnings on the volatility of crypto.
“Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto,” stated Gary Gensler, SEC chairman.
That sentiment was also shared by Commissioner Caroline Crenshaw who presented a clear verdict on the situation.
“I am concerned that these products will flood the markets and land squarely in the retirement accounts of US households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot Bitcoin markets,” she said.
What does the listing mean for Bitcoin?
Investors can now use this ETF as a way of investing or trading on the asset class without having to buy the commodity themselves.
This represents diversification for Bitcoin, as up to this point, any interested parties would be required to obtain a digital wallet or open an account with a trading platform such as Binance or Coinbase.
Fund managers like BlackRock and Fidelity Investments had been lobbying for the approval and presented the case to the SEC. They will be managing the funds and are now in a position to benefit from the new business.
The Guardian report also noted the price of Ethereum, the second-most popular cryptocurrency form, has spiked on speculation that fund managers will now create ETFs around it, on the back of the listing for Bitcoin.