United States financial regulators approved the first spot bitcoin exchange-traded fund
The US Securities and Exchange Commission approved the listing and trading of eleven spot bitcoin exchange-traded funds (ETFs)
After a lengthy legal procedure that lasted six years, the United States Securities and Exchange Commission (US SEC) has approved the first-ever spot bitcoin exchange-traded fund (ETF). The SEC announced that the approval was granted for 11 ETFs waiting for the decision. The SEC fought several court cases against the companies seeking approval, and the court decisions were not favourable for them. This is a long-anticipated move from the SEC, and the whole finance industry in the US welcomed the decision.
In its statement, the SEC stated that the granting of the bitcoin ETF does not mean that the SEC is promoting the cryptocurrency and called for individual investors to be cautious when they invest in digital assets.
What is the exchange-traded fund?
Invented back in the 1990s, exchange-traded funds are baskets of bonds or other assets that are usually managed by the leading financial investment firms. They can be traded on the stock exchanges and, therefore, realise gains and losses from trading. They are invented as a platform for the individual investors to participate. By investing in several assets and diversifying its portfolio, individual investors reduce the chance for significant losses.
Why is the bitcoin exchange-traded fund important for digital assets?
Considering that cryptocurrency use and safe storage still require certain technical knowledge, the ETF offers the opportunity for individual investors to invest directly in the cryptocurrency markets without the risk associated with cybersecurity. The bitcoin exchange-traded fund opens the way to invest in digital assets managed by professionals. From eleven companies that applied for the SEC approval, there are some Wall Street financial giants such as BlackRock or Van Eck but also a new wing of the crypto and innovative tech industry such as Fidelity or Ark Investments. Together, they manage hundreds of billions of dollars that will now be exposed to the cryptocurrency market. The ETF will follow the spot price of the bitcoin cryptocurrency, and may benefit the price stability of bitcoin. It will also serve as a safeguard for individual investors from the industry known for its many blunders
The SEC announcement comes one day after the security incident related to their X account. In the alleged hack, shared content was news that the SEC approved spot bitcoin exchange-traded fund. Was this a message that went public by accident or mistake from the account holders? Or was it a malicious act from the third party to undermine the government agency? Answering this question will be the primary purpose of the FBI investigation announced yesterday by the Securities and Exchange Commission
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The GIP Digital Watch Observatory team, consisting of over 30 digital policy experts from around the world, excels in the fields of research and analysis on digital policy issues. The team is backed by the creative prowess of Creative Lab Diplo and the technical expertise of the Diplo tech team.