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On January 10, the US Securities and Exchange Commission (SEC) took a significant step approval 11 Spot Bitcoin Exchange Traded Funds (ETFs). The SEC’s green light paves the way for these ETFs to trade on U.S. stock exchanges and comes after a decade-long journey to gain approval for spot Bitcoin ETFs—a journey that involved intense legal battles and debates on the propriety of Bitcoin-related investment products.
The crypto industry applauded the SEC’s decision, and rightly so: the availability of spot bitcoin ETFs will provide retail investors with the opportunity to gain exposure and access to an innovative new asset class within a highly regulated environment. As noted by SEC Commissioner Hester Pierce in statementthis is a positive development that encourages openness and innovation in financial markets and increases opportunities for investors.
The SEC’s ETF approval is important for another reason: It paves the way for deeper institutional involvement in the crypto space. Major financial institutions and institutional investors have been intrigued by the possibility of innovation through crypto-asset engagement for years – but many have been reluctant to take direct exposure to cryptocurrencies for fear of volatility and regulatory uncertainty. The availability of spot Bitcoin ETFs offers an avenue for corporate, institutional players to gain exposure and play a role in the crypto space – a dynamic that will only deepen over time.
In approving the ETF, SEC Chairman Gary Gensler he quickly pointed out points out that approving a Bitcoin ETF does not equate to the regulator accepting the legitimacy of digital assets in a broader sense, and stressed that the SEC remains concerned about behavior in the crypto space.
According to Gensler, the SEC’s approval of these ETFs “should in no way signal the Commission’s willingness to approve listing standards for crypto-asset securities. The approval does not indicate anything about the Commission’s views on the status of other cryptoassets under federal securities laws or on the current state of non-compliance of certain cryptoasset market participants with federal securities laws. As I have said in the past, and without prejudice to any crypto asset, the vast majority of crypto assets are investment contracts and therefore subject to federal securities laws.” SEC Commissioner Caroline Crenshow elaborated on these concerns in a separate statement.
While the SEC’s leadership still appears to be a long way from embracing major cryptocurrencies, make no mistake: its approval of spot Bitcoin ETFs is a result of, and will prove to be, an additional catalyst for improving trust and transparency in the crypto space. Indeed, one of the primary reasons given by the SEC for approving ETFs is that they will be traded on national securities exchanges, which are necessary to protect against the risk of fraud and market manipulationand have oversight mechanisms in place designed to identify and mitigate potential abuse.
This foundation of trust and transparency was fundamental to our vision at Elliptic. Over the past decadewe’re built solutions for risk management for crypto with the aim of creating trust and confidence in this new asset class.
The SEC’s approval of spot Bitcoin ETFs is an indication that confidence in this space is growing – and will help reinforce an additional sense of trust and transparency in cryptocurrencies that will only continue to grow.
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