US SEC approves landmark bitcoin ETF
By Daniel Tyson
October 18, 2021
The US Securities and Exchange Commission (SEC) approved bitcoin futures exchange-traded funds (ETFs) on Friday 15 October, opening investing to the masses.
But some groups worry that small investors will lose out to Wall Street.
On Monday morning bitcoin continued its current surge, trading at $61.775.31 (£44,991.32).
Under the ruling investors can now receive protections that put it on par with other ETF products under the purview of SEC or Commodity Futures Trading Commission (CFTC), which both commissions have some regulatory control now. An example, the CFTC will oversee the underlying Chicago Mercantile Exchange futures market as the underlying asset class for the ETF, and the SEC will manage the actual ETF filings.
For years, the SEC has held off giving its blessing to bitcoin futures ETFs, but by unanimous agreement the five commissioners decided approval was warranted. No statement was released by the SEC and an email by Capital.com went unreturned Monday morning.
Benefits of ETF
Bitcoin ETF supporters said the move would make bitcoin more accessible to individuals versus other cryptocurrency by giving investors a regulated forum to trade digital assets. Investing in an ETF is not a direct investment in bitcoin
Howard Greenberg, president of the American Blockchain and Cryptocurrency Association explain SEC ruling clarifies and allows for more institutional investment for cryptocurrencies as a cash-settled derivative of bitcoin futures and a pathway for businesses to hold bitcoin on a balance sheet.
“This ruling also creates another investment avenue for those who don’t want to open a crypto exchange account but can now trade from their preferred stock trading platform,” he told Capital.com
The initial product will track bitcoin futures, rather than the price of bitcoin directly, however, Gensler said he believes ETF gives investors a cushion. This may have been a compromise, as Gensler has previously said investors protection is the commission’s main goal.