SEC Approves First-Ever Spot Bitcoin ETFs: What You Need to Know
The Securities and Exchange Commission (SEC) made history on Wednesday, Jan. 10, by approving the first-ever spot Bitcoin ETFs. This approval includes ETFs from major financial institutions like Fidelity, BlackRock, and Invesco. In total, the SEC approved 11 spot Bitcoin ETFs, with 10 of them starting trading on Thursday, Jan. 11.
A spot Bitcoin ETF is an exchange-traded fund that directly tracks the price of Bitcoin by holding a large amount of the cryptocurrency itself. This is similar to a spot gold ETF, which holds physical gold bullion on behalf of its shareholders. These newly approved ETFs are the first cryptocurrency funds to trade on a major exchange and hold Bitcoin directly.
The approval of these ETFs has sparked a price war among issuers, with many slashing fees and offering promotional fee waivers to attract investors. However, there are concerns about custodianship risk, as most spot Bitcoin ETFs rely on third-party custodians like Coinbase to store their Bitcoin holdings.
Despite the bullish sentiment surrounding the approval of these ETFs, experts like Peter Eberle caution that the impact on Bitcoin’s price may not be immediate or as significant as some expect. Eberle also believes that ETF approvals will likely be limited to Bitcoin and Ethereum for the time being, with other cryptocurrencies facing regulatory hurdles.
Overall, the approval of spot Bitcoin ETFs marks a significant milestone in the cryptocurrency market, providing investors with new opportunities to gain exposure to Bitcoin through traditional financial instruments.
