FINANCE
What is a spot bitcoin ETF? Everything you need to know about the SEC approval
More than $4.6 billion in Bitcoin EFTs have been traded on their first day on the market. What you need to know about the new product.
On Wednesday, 10 January, the Securities and Exchange Commission (SEC) allowed for the trading of Spot Bitcoin EFTs. Trading began the next day.
Eleven EFTs have been approved and are now listed on three stock exchanges: NYSE Arca, Cboe BZX, and Nasdaq. SEC Chair Gary Gensler released a statement explaining that the approval increases protections for investors already buying and selling Bitcoin. The SEC will require those offering EFTs “to provide full, fair, and truthful disclosure about the products” and mandate that “any bitcoin ETP that is listed and traded will benefit from the disclosure included in public registration statements and required periodic filings.”
This news comes after the collapse of FTX, the largest cryptocurrency trading platform, in late 2022. After FTX declared bankruptcy and its leaders were charged with financial crimes, the crypto market has come under greater scrutiny, leading some to question the decision made by the SEC. To prevent fraud and manipulation, the SEC will closely monitor that the rules designed by the agency are being allowed. For major financial firms like Blackrock, who can now offer Bitcoin EFTs to their customers, the decision from the Fed gives them an advantage as crypto trading platforms and intermediaries are “not endorsed.” The SEC made clear that these companies did not have the approval of the agency because of their track record of non-compliance “with the federal securities laws and often have conflicts of interests.”
Billions were traded on the first day
Already, over $4.6 billion in these EFTs have been traded on the first day, highlighting the interest in this financial product. The price of Bitcoin has benefited from the SEC’s approval, with the value of the cryptocurrency increasing 50 percent to $46,276 over the last six months. Reuters has reported that the vast majority of the trading has been done by Grayscale, BlackRock, and Fidelity.
Leaders on Capitol Hill voice their concerns
Some leaders in Washington have come out against the SEC’s decision to approve the new Bitcoin EFTs. Massachusetts Senator Elizabeth Warren posted on X that the “SEC is wrong on the law and wrong on the policy with respect to the Bitcoin EFT decision.” The leader has concerns over the further entrenchment of cryptocurrency in financial markets.
While the SEC tried to quell nerves by making clear their intention to monitor the situation closely, many lawmakers remain unconvinced that the SEC will be able to adequately prevent fraud and misuse of financial products by bad actors.