Breaking News: SEC Greenlights Spot Bitcoin ETFs for Trading on Thursday!

Bombolo | News and Media

Bitcoin exchange-traded funds (ETFs) are now allowed to be traded starting Thursday. This comes after getting approved from the U.S. Securities and Exchange Commission (SEC) on Wednesday. In simple terms, it means that people can now invest in Bitcoin through these funds, which are like baskets of Bitcoin traded on the stock exchange.

The process of getting approval for a spot Bitcoin ETF (Exchange-Traded Fund) in the United States has taken a long time. It all started in 2013 when a group connected to the Winklevoss twins (known for their involvement in early Bitcoin) submitted the first application for this type of financial product to the U.S. Securities and Exchange Commission (SEC).

In simpler terms, they wanted to create an investment product tied to the actual price of Bitcoin, traded on the stock exchange. However, it took several years for the SEC to review and approve the idea, and now, after this lengthy journey, they have finally given the green light for spot Bitcoin ETFs to be traded.

The first attempt to get approval for a Bitcoin ETF tied directly to the actual Bitcoin price was turned down. However, the SEC did approve Bitcoin ETFs based on futures contracts (agreements to buy or sell Bitcoin at a future date at a predetermined price), starting in 2021.

The push for a spot Bitcoin ETF gained significant support when BlackRock, a major player in traditional finance, applied for one in June of the previous year. So, when such prominent players in finance expressed interest, it increased the belief that the regulatory authorities would approve spot Bitcoin ETFs.

The regulator, which is the organization that oversees financial activities, has approved 11 spot Bitcoin ETFs. The approved ETFs include those from various companies like ARK, Bitwise, Fidelity, Franklin, Grayscale, Hashdex, Invesco, iShares, Valkyrie, VanEck, and WisdomTree.

To attract investors, many of these companies reduced or waived the fees associated with their spot Bitcoin ETFs before getting the approval from the regulator.

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What Happens to Bitcoin Now that It's Approved by Regulators

The approval from the SEC is like a big official stamp saying it's okay to invest in the world's biggest cryptocurrency, Bitcoin. This makes some investors feel more comfortable because now there are more rules in place to protect them.

Until now, regular people who wanted to invest in cryptocurrency could either buy the actual coins or invest in ETFs that deal with cryptocurrency futures (agreements to buy or sell crypto at a future date). However, with a spot Bitcoin ETF, it becomes easier for everyday investors, especially those who may not be tech-savvy, to invest in Bitcoin. They can do this without the need for a specialized Bitcoin wallet. Instead, they can simply buy and hold the ETFs in their regular investment accounts with a broker.

Experts believe that a lot of money is likely to be invested in Bitcoin spot ETFs. In simpler terms, because people are optimistic about the new Bitcoin investment options, they are expected to put a large amount of money into these investments, and this optimism has contributed to the rise in the price of Bitcoin.

Bloomberg Intelligence suggests that the market for spot Bitcoin ETFs could eventually reach a value of $100 billion. Another financial services provider, Galaxy, predicts that the amount of money invested in these ETFs could go from $14 billion in the first year to $39 billion within three years. In simpler terms, experts believe a lot of money could be put into these investment products, with the market potentially growing to very large amounts over time.

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