The U.S. Securities and Exchange Commission (SEC) finally gave the green light to the first regulated spot Bitcoin exchange-traded funds (ETFs). This decision comes on the heels of a false announcement posted on the SEC’s official Twitter account, causing temporary chaos in the markets.
According to an official press release from the SEC, issued on January 10th, the Commission has officially approved the listing and trading of spot Bitcoin exchange-traded product (ETP) shares. The announcement was accompanied by a statement from SEC Chairman Gary Gensler, who emphasized the Commission’s commitment to acting within the confines of the law and judicial interpretations.
Chairman Gensler acknowledged the Commission’s previous disapproval of over 20 spot Bitcoin ETP filings from 2018 to March 2023. However, he highlighted a shift in circumstances following a court ruling that the Commission had failed to sufficiently explain its disapproval of Grayscale’s proposed ETP. The court vacated the Grayscale Order, prompting the Commission to reconsider its stance.
In his statement, Gensler clarified that the Commission evaluates rule filings based on their consistency with the Exchange Act and regulations. He emphasized the Commission’s neutrality towards specific companies, investments, or assets underlying an ETP as long as they comply with relevant laws.
Cautionary Notes On Bitcoin and Associated Risks
Importantly, Gensler stressed that the approval is limited to ETPs holding one non-security commodity—BTC. This should not be interpreted as a signal to approve listing standards for crypto asset securities. Gensler reaffirmed the Commission’s position on the majority of crypto assets being subject to federal securities laws.
The SEC outlined investor protections in this approval, including the requirement for sponsors to provide transparent disclosures about Bitcoin ETPs. Additionally, these products will be listed and traded on registered national securities exchanges, subject to rules designed to prevent fraud and manipulation.
Commission staff is simultaneously reviewing registration statements for 10 spot Bitcoin ETPs, aiming to create a level playing field for issuers and promote fairness and competition. However, Gensler urged caution among investors, emphasizing the speculative and volatile nature of Bitcoin, which is also associated with illicit activities such as ransomware, money laundering, sanction evasion, and terrorist financing.
While the SEC has approved the listing and trading of certain spot Bitcoin ETP shares, investors are advised to remain vigilant due to the inherent risks associated with Bitcoin and related products.
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