US regulators give green light to bitcoin ETFs
NEW YORK (CNN) — After a false start Tuesday, the Securities and Exchange Commission gave its approval Wednesday for some investment companies to offer “spot bitcoin” exchange-traded funds.
The regulator’s highly anticipated move is expected to make bitcoin investing more accessible to Main Street investors, without requiring them to own the digital asset directly.
SEC Chair Gary Gensler made it clear in a statement that the agency remains wary. “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,” he wrote in a statement posted on the SEC’s website.
The SEC had a deadline of January 10 to offer a decision for just one of the 11 firms that applied to offer bitcoin ETFs. On Wednesday it offered approval to all of 11 of them.
Bitcoin, the leading cryptocurrency, has a current market cap of roughly $900 billion. It has seen volatile price swings throughout its 15-year history. Most recently, after hitting an all-time high of nearly $69,000 in November 2021, it fell below $17,000 during the “crypto winter” of 2022 and has mostly been trading north of $45,000 in the run-up to the SEC’s decision.
Soon after the news on Wednesday, the price of bitcoin was down nearly 2% to $45,431, according to data on coinmarketcap.com.
After the stock market close on Tuesday, a post on the SEC’s X account falsely claimed the regulatory agency had approved the listing and trading of spot bitcoin exchange-traded products.
That was quickly debunked by Gensler, and the SEC took down the message. According to X, an “unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party” was responsible for the post. On Wednesday, the SEC said the FBI was looking into the matter.
Bitcoin ETFs, like bitcoin, carry risks for investors
For those considering jumping on the bitcoin bandwagon, it’s important to note that the price of a bitcoin will be just as volatile whether you invest in it directly yourself or through an ETF.
Earlier this week, Gensler posted a thread on X warning investors of the risks of crypto investing generally. “Investments in crypto assets also can be exceptionally risky & are often volatile. A number of major platforms & crypto assets have become insolvent and/or lost value. Investments in crypto assets continue to be subject to significant risk,” his post read.
Those sentiments have been echoed by many financial advisers and the investor watchdog group Better Markets, which strongly opposed the SEC’s approval of bitcoin ETFs. Among its objections is the bitcoin market’s history of artificially inflated trading volumes known as “wash” trading.
In a scathing statement following the SEC’s announcement, the group’s president and CEO Dennis Keller pulled no punches. “With the flagrantly lawless crypto industry crashing and burning due to a mountain of arrests, criminal convictions, bankruptcies, lawsuits, scandals, massive losses, and millions of investor and customer victims, who would have thought that the SEC would come to its rescue by approving a trusted and familiar investment vehicle that will enable the mass marketing of a known worthless, volatile, and fraud-filled financial product to Main Street Americans.”