Bitcoin ETFs get green light from US regulator

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Bitcoin ETFs get green light from US regulator

The US Securities and Exchange Commission (SEC) has approved the first US-listed exchange-traded funds (ETFs) to track the price of bitcoin, in a landmark decision that could boost the adoption and legitimacy of the cryptocurrency.

The SEC announced on Wednesday that it had approved 11 applications for bitcoin ETFs from various fund managers, including BlackRock, Fidelity, Invesco, and VanEck. The approval came after a court ruling that vacated the SEC’s previous disapproval of a bitcoin ETF proposal by Grayscale Investments.

An ETF is a type of investment product that allows investors to buy and sell shares that represent a basket of assets, such as stocks, bonds, commodities, or cryptocurrencies. ETFs are traded on stock exchanges, making them accessible to a wide range of investors.

Bitcoin ETFs are expected to track the spot price of bitcoin, which is the price of the cryptocurrency in the open market. This is different from the existing bitcoin trust products, such as Grayscale Bitcoin Trust, which trade at a premium or discount to the underlying asset.

Bitcoin ETFs could offer several benefits to investors, such as lower fees, higher liquidity, tax efficiency, and regulatory oversight. Bitcoin ETFs could also increase the demand and awareness of bitcoin, as they would allow more institutional and retail investors to gain exposure to the cryptocurrency without having to deal with the technical and security challenges of buying and storing bitcoin directly.

However, bitcoin ETFs also come with risks, such as volatility, hacking, fraud, and regulatory uncertainty. The SEC warned investors to remain cautious about the potential pitfalls of investing in bitcoin and related products, and said that its approval did not imply any endorsement or approval of bitcoin itself.

The SEC also clarified that its approval was limited to bitcoin ETFs that hold the actual cryptocurrency, and not to ETFs that invest in bitcoin futures contracts or other derivatives. The SEC also said that its approval did not signal its views on the status of other cryptocurrencies under the federal securities laws, or on the compliance of crypto market participants with the securities laws.

The approval of bitcoin ETFs in the US is seen as a major milestone for the crypto industry, which has been seeking regulatory clarity and recognition for years. The US is the largest and most influential financial market in the world, and its acceptance of bitcoin ETFs could pave the way for similar products in other jurisdictions, including India.

Bitcoin, the world’s largest cryptocurrency by market capitalization, surged to a new all-time high of over $69,000 on Wednesday, following the news of the SEC’s approval. Bitcoin has gained more than 130% in the past year, driven by growing adoption, innovation, and speculation.



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