After Tuesday’s fiasco, yesterday the news was true. The United States Securities and Exchange Commission (SEC) approved a new product, ETFs, which are exchange-traded funds linked to bitcoin, marking a milestone for the cryptocurrency industry.
Its listing will begin on the stock market this Thursday and will give investors access to this controversial and volatile value that is expected to increase investment in the technology sector.
This instrument promises to revolutionize the market. The decision will likely lead to the conversion of the $29 billion in cryptocurrency held by Grayscale Bitcoin Trust into ETFs, as well as the launch of competing traditional funds such as BlackRock or Fidelity.
The authorization affects a total of eleven financial firms that will offer “exchange-traded funds” linked to bitcoin. ETFs are investment products that replicate the valuation of an asset such as a commodity, currency, bond or stock.
They were already a popular investment, but they were in the jungle. They now become part of the world regulated by the SEC, accessible to conventional finance and will make it easier for individual investors to access. This means that “they will be subject to surveillance and compliance measures to ensure consumer protection.”
An ETF offers an avenue to invest in bitcoin that does not require purchasing the cryptocurrency directly from exchanges like Binance or Coinbase.
A clear example of what this scenario translates into was already seen on Tuesday when the SEC’s X account was hacked and it was assumed that exchange-traded funds with bitcoins had been accepted. “Today the SEC approves bitcoin ETFs for listing on all national stock exchanges,” that message reported.
The impact was immediate. The cryptocurrency jumped over $1,000 immediately. Bitcoin went from trading at $46,700 to around $47,900 in just five minutes, a 3% rise, according to data from Coinmarketcap.
It was short-lived, but illustrative. Gary Gensler, chairman of the SEC, repudiated that “unauthorized” message. A spokesperson spoke of the work of hackers. This punctured the price and bitcoin fell to $45,466, 5% below the maximum of that day. Yesterday there was no puncture.
