The U.S. Securities and Exchange Commission (SEC) has approved the first applications for spot bitcoin exchange-traded funds (ETFs) from 11 different issuers after denying similar proposals for over 10 years.
tl;dr:
- SEC approves 11 spot bitcoin ETFs after over a decade of rejections
- ETFs to be listed on CBOE, NYSE and Nasdaq with fees ranging from 0.2% to 1.5%
- Approval marks potential watershed moment for crypto, expanding access
- Bitcoin price slightly higher after news to around $45,700
The approved ETFs will be listed on major exchanges like CBOE, NYSE and Nasdaq and charge annual fees ranging from 0.2% to 1.5%, with some firms like ARK Invest offering introductory fee waivers.
The SEC approval opens the floodgates and could significantly expand access to bitcoin investments for both institutional and retail investors. It also lends further legitimacy to the cryptocurrency industry.
Bitcoin’s price was marginally higher on the day of the announcement, trading around $45,700 according to CoinMarketCap data. The approval comes as bitcoin is already up over 160% from January 2022.
Spot bitcoin ETFs allow investors exposure to bitcoin without directly owning it. Instead, they own shares in funds like those offered by BlackRock and Fidelity that directly hold bitcoin. This contrasts with futures-based bitcoin ETFs already on the market which hold derivative contracts linked to bitcoin’s price.
The news was welcomed by industry participants, emphasizing the milestone moment for crypto adoption and traditional finance’s growing embrace of digital assets through trusted structures.
How to invest in bitcoin spot ETFs:
The Securities and Exchange Commission’s approval of spot bitcoin exchange-traded funds (ETFs) now allows investors to more easily gain exposure to bitcoin through their existing brokerage accounts. Rather than open a specialized crypto exchange account, investors can simply buy these ETFs alongside traditional stock and bond funds.
Major asset managers like BlackRock and Cathie Wood’s ARK Invest are launching bitcoin spot ETFs following the SEC’s decision. Wood believes it will “democratize access” to what she sees as one of history’s most important assets.
A spot bitcoin ETF tracks the price of bitcoin directly, which is prone to high volatility. Bitcoin currently trades around $46,000, far below its November 2021 peak of $67,802 but above last January’s low of $17,474.
The ETF structure brings bitcoin into a regulated environment overseen by the SEC, providing more protections compared to owning bitcoin directly or through less regulated crypto platforms. ETF shares also carry insurance from the Securities Investor Protection Corporation, safeguarding investors up to $500,000 in assets.
Financial advisors can now more seamlessly manage bitcoin exposure for clients alongside traditional assets. Lower fees are also expected compared to owning bitcoin directly, as major ETF issuers compete in this newly approved space. BlackRock’s CEO has specifically cited crypto’s high costs as a barrier to mainstream adoption.
While risks still exist, the ETF wrapper brings bitcoin into a robust regulatory framework suitable for average investors new to the crypto space. Opening these ETFs to brokerage accounts removes friction for those seeking bitcoin exposure alongside their traditional portfolios.