A New Chapter for Bitcoin: SEC’s Green Light for Bitcoin ETF January 11, 2024 by George

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The U.S. group that oversees the stock market, called Securities and Exchange Commission (SEC), has just said yes to a new way of investing in Bitcoin. This could open a new wave in the crypto industry.

Big News: Approved Bitcoin ETFs

The SEC finally approved 11 spot Bitcoin ETFs on Wednesday including from big companies like Grayscale, Fidelity, and BlackRock. This is a big deal because it’s the first time they’ve done this in Bitcoin’s 15 years history. These new options mix old-style investing with the digital world of Bitcoin, making it easier for people to put their money in Bitcoin without dealing with the tricky parts of owning Bitcoin directly. 

David Mercer, CEO of LMAX Group, commented:

This is a pivotal moment that legitimises Bitcoin’s future and marks a significant step forward in the convergence of digital assets and traditional finance. The approval of these Bitcoin ETFs is just the start of increasing market access to crypto for institutions and private investors who were previously disadvantaged. It is our long-held view that blockchain and tokenisation are the future of capital markets and crypto, as a proxy for that tokenisation, is an essential element of a broad, diversified investment portfolio. 

Picture: David Mercer the CEO of LMAX Group comments on Bitcoin ETF approval | Source: LinkedIn

Picture: David Mercer the CEO of LMAX Group | Source: LinkedIn

How We Got Here

Getting this approval wasn’t easy and it took a long time and had many steps. Before, between 2017 and 2020 the SEC always said no to this kind of Bitcoin investment because they were worried it wasn’t safe or properly controlled. They cited concerns about market manipulation and investor protection.

But everything changed in 2023 when a federal court ruled the SEC was wrong to say no to one of these Bitcoin investments from Grayscale. After that, many big companies started asking to make their own Bitcoin investments, showing that things were changing.

The negative views are reflected in a statement made to FOX Business by Jamie Dimon, CEO of JPMorgan Chase. He said, that Bitcoin is used for sex trafficking, tax avoidance, money laundering and terrorism financing:

What This Means for Investing

This approval changes how people can invest in Bitcoin. In the past, if you wanted to invest in Bitcoin, you had limited options to do that. You had to buy shares of companies that invested in Bitcoin or by through more difficult futures trading strategies. And of course you could buy it directly on DEXs or Crypto Exchanges, but most of the people found it complicated.  Now, with these new Bitcoin investments, it’s much easier investing in Bitcoin.

The reaction in the market right away wasn’t big, but in the future, it could be a really important change, especially for big investors like pension funds and insurance companies. So new capitals could flood in the industry as more and more people could invest easily in Bitcoin. This week, experts from Standard Chartered suggested that these new Bitcoin investments could attract between $50 billion and $100 billion just in this year. Meanwhile, other experts believe the total amount invested will be around $55 billion over the next five years.

JJ Kinahan, CEO of IG North America and President of tastytrade commented:

“We’re always in favor of allowing retail traders and investors to make their own self-directed decisions, and we see crypto as a product that is truly not going away – and in fact, it seems to be getting more support year after year. Retail traders and investors should be able to, as appropriate, choose to invest in and or trade this product as fits their investment needs.”

A Word of Warning

Even though this is exciting, the head of the SEC, Gary Gensler, and his team are reminding people to be careful. They say that just because they allowed these Bitcoin investments doesn’t mean they think Bitcoin is always a good choice. There are still risks with investing in Bitcoin, and it can be very up and down.

However, it is promising that Gary Gensler also voted yes on ETFs:

What’s Next

Allowing these Bitcoin investments is a big step in bringing together the regular financial world and the newer world of digital money like Bitcoin. As these investments start being bought and sold, people are watching to see how this will make Bitcoin more accepted and understood. Now that these big, trusted companies are offering ways to invest in Bitcoin, we’re starting a new part of the Bitcoin story, which could bring both exciting chances and new challenges.