Key Insights
- SEC grants over 10 spot Bitcoin ETF approvals after years of rejections
- Bitcoin price drops 2% post-news as investors take profits from 2023 rally
- SEC chair avoids endorsing crypto, cites volatility and illicit usage risks
NEW YORK – The U.S. securities watchdog opened the floodgates to Bitcoin exchange-traded funds (ETFs) on Wednesday, granting over 10 sought-after approvals for spot crypto products to begin trading despite lingering misgivings around volatility and illicit usage.
The breakthrough greenlight from the Securities and Exchange Commission (SEC) came after a lengthy wait stretching years where dozens of spot ETF applications from heavyweights like Ark Invest and Fidelity were repeatedly spurned.
Many investors hope easier retail access unleashes pent-up Wall Street demand for Bitcoin exposure, fueling a new growth leg after the cryptocurrency rallied 77% since August on rising approval optimism.
Instead, the landmark news sparked profit-taking in reality, with prices dropping 2% towards $45,700 by Wednesday afternoon – still leaving stellar year-to-date returns.
Read also! Spot Bitcoin ETF Volumes Hit $1.8B, 3X More than 2023 Funds
Gary Gensler maintaining warnings on crypto speculation
SEC Chair Gary Gensler pointedly avoided endorsing Bitcoin in confirming the shake-up, arguing regulators remain “neutral” regarding crypto merits versus asset classes like gold.
He stated Bitcoin is still predominantly held for speculative upside rather than consumer uses, while also highlighting illicit usage risks that continue clouding formal endorsements.
Though we’re merit neutral, I’d note the underlying assets in metals ETFs have consumer and industrial uses, while in contrast Bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing, Gensler said in a statement.
Other industry leaders downplayed those concerns, insisting stricter controls can circumscribe exposure while huge latent investment interest finally gets an outlet through above-board ETF vehicles.
Approvals may additionally force increased transparency around Bitcoin trading volumes if suspicions of market manipulation underpinning crypto price swings are true.
For now the verdicts cap years of heated crypto lobbying and ensure digital asset allocation can no longer be ignored by portfolio managers given intensified mainstream awareness.