News
First Bitcoin ETFs approved by US regulators
“Although we today approved the listing and trading of certain Bitcoin spot ETP shares, we have not approved or endorsed Bitcoin,” SEC Chairman Gary Gensler said in a statement. “Investors should remain cautious of the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
For the past 10 years, the SEC has denied any attempt to create a Bitcoin ETF, which is a collection of assets that functions somewhat like a mutual fund. Unlike a mutual fund, these vehicles trade on a stock exchange, where stock market participants can easily buy and sell them. This is crucial here: this means, basically, that you can invest in Bitcoin without having to create your own wallet.
This might be enough for certain types of investors who have stayed away get started in cryptocurrency. Crypto investors are happy about this, because to secure their funds, companies that issue ETFs will need to purchase corresponding amounts of Bitcoin.
The price of Bitcoin has barely moved in the face of today’s news. In the long term, however, a Bitcoin ETF makes it easier for traditional institutional investors to get into crypto. Pension funds and insurance funds, for example, could speculate on the price of Bitcoin for the first time, which would increase demand for Bitcoin.
Right now, the proxy for investing in cryptocurrency is buying shares of crypto-focused companies like Coinbase and MicroStrategy, which own over $8 billion worth of Bitcoin in January. The entry of a Bitcoin ETF could make these companies less valuable.