So, after a whole decade of kicking the can ever further down the road, the U.S. Securities and Exchange Commission (SEC) has finally (and some might suggest, begrudgingly) approved a spot bitcoin exchange-traded fund (ETF). And not just the one, as the regulator approved 11 separate pending applications in one fell swoop on Wednesday - although only ten started trading on Thursday, as Hashdex hasn’t refocused its bitcoin futures ETF product to spot bitcoin yet.
SEC Chair Gary Gensler was quick to follow the announcement by issuing a statement suggesting that he hadn’t really wanted to grant approval, but that his hand had been forced by the appeals court ruling in August, which slammed the SEC’s earlier Grayscale refusal as ‘arbitrary and capricious’. Gensler also made it clear that the ETF approvals did not “approve or endorse bitcoin.”
So Gensler acted as 100% Gensler as you could ever imagine him to, short of peeling off his human skin and revealing himself as a ‘lizard person’. Good going for a man whose agency lost control of its X account on the eve of the decision and is now being investigated by the FBI for a hoax posting, pre-empting the actual approval.
Other SEC commissioners were not so resentful. Crypto advocate Hester Pierce lamented that the commission had, “squandered a decade of opportunities to do our job.” Meanwhile, Commissioner Mark Uyeda stated his concerns about the methodology of the SEC decision, but added that:
“because I have independent reasons for concluding that the applications satisfy the standards for approval set forth in the Exchange Act, I support the issuance of the Approval Order despite my objections to the legal analysis set forth in that order.”
X’s crypto community (the artists formerly known as Crypto Twitter) celebrated news of the approvals, and the response of most commenters was that this was a positive thing for Bitcoin. One notable dissenting voice was that of Anti-Crypto Senator Elizabeth Warren, who criticized the SEC decision, pushing her usual terrorist funding rhetoric as justification.
Bitcoin price briefly spiked on the news of the approvals, but came back down within a couple of hours, and has since returned to around $44,000, the level that it held before the SEC account ‘compromise’. So it seemed as though the market had already priced in the acceptance announcement. At least in the short term, that is, although ARK Invest CEO Cathie Wood has upped her prediction for bitcoin price by 2030 from an already heavily bullish $1 million to a cool $1.5 million.
Investors were certainly not shy about the new products, with BlackRock’s iShares Bitcoin Trust alone handling just over $1 billion volume in its first-day of trading. In total the new ETFs saw over $4.5 billion of volume over the first trading period. Not all investment companies were on board however, and asset manager Vanguard blocked clients from purchasing the ETFs, leading to threats of a mass customer exodus.
And, just when you thought it was safe to get back in the water, attention has now moved to the decisions on pending spot ether ETF applications, which the SEC recently bumped back to May. Many believe that the approval of a spot ether ETF is now inevitable, but from Gensler’s tone, it may not be as forthcoming as people think.
One other immediate takeaway is that over 50% of financial advisors were 100% wrong in believing that a spot bitcoin ETF would not be approved in 2024. So you may want to keep that in mind and consider going elsewhere for financial advice in future.