SEC approves spot bitcoin ETFs for trading in the US

• The Securities and Exchange Commission approved late Wednesday spot bitcoin ETFs for trading in the US.
• The approval has been years in the making and offers investors an easy way to gain exposure to the cryptocurrency.
• The price of bitcoin dropped about 1% to $45,620 following the SEC's approval of the ETFs. 

The Securities and Exchange Commission late Wednesday approved spot bitcoin ETFs for trading in the US in a decision that has been years in the making.

The SEC approved 11 bitcoin ETF applications from different issuers, including Fidelity, BlackRock, and VanEck, among others, according to a document posted to their website.

The bitcoin ETF approvals by the SEC were on an accelerated basis, and trading in the ETFs will begin on Thursday, the regulator added. The price of bitcoin fell about 1% following the SEC's approval of the ETFs to $45,620. 

Grayscale's bitcoin ETF application was one of the 11 spot bitcoin ETFs that were approved, according to a statement from the company made to TheBlock. 

"I am happy to confirm that the Grayscale team has received necessary regulatory approvals to uplist GBTC to NYSE Arca, and we will share a press release with additional information shortly," the Grayscale spokesperson said.

Grayscale's successful lawsuit against the SEC helped kicked off the approval process for spot bitcoin ETFs, and a court ruling last year essentially forced Wednesday's decision.

SEC Chair Gary Gensler remained skeptical about bitcoin, saying in a statement that it "is primarily a speculative, volatile asset that's also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing."

He added, "While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto."

The spot bitcoin ETFs are similar to spot gold ETFs in that they hold bitcoin as an underlying asset of the fund, unlike bitcoin futures ETFs, which have already been approved for trading and hold onto futures contracts tied to bitcoin.

Analysts expect the spot bitcoin ETFs to boost demand for bitcoin as investors and even financial advisors can now easily allocate money to the cryptocurrency, which has a total market value of more than $900 billion.

That's because they would no longer have to jump through the hoops of opening up an account with a crypto custodian, buying the cryptocurrency directly, and dealing with different types of storage options for the asset.

Instead, a spot bitcoin ETF would allow a large swath of investors to gain exposure to the cryptocurrency from the convenience of their already established brokerage accounts.

The issuance of bitcoin ETFs from Wall Street giants should also give the asset class more credibility to traditional investors as big-name traditional asset management firms are launching bitcoin ETFs.

Booming demand could also send bitcoin's price soaring. Standard Chartered said bitcoin ETFs could send the price to $200,000 by the end of 2025, while Fundstrat's Tom Lee said bitcoin could reach as high as $150,000 in the next 12 months.

"If ETF-related inflows materialize as we expect, we think an end-2025 level closer to USD 200,000 is possible. This assumes that between 437,000 and 1.32mn new bitcoins will be held in spot US ETFs by end-2024," Standard Chartered said in a note Monday, adding that inflows into the ETFs could be between $50 billion and $100 billion in their first year of trading.

Anticipation for a bitcoin ETF has been mounting for the past few weeks as various applicants offer more details about the fees they will be charging if their funds are approved. 

Approval of the spot bitcoin ETFs comes after the SEC's X social media account was compromised and posted an unauthorized message late Tuesday that the bitcoin ETFs had been approved.

Gensler was quick to post a rebuttal to his X account to say that it was an unauthorized post and that the ETFs had not yet been approved.