After a long and anxious wait, the US Securities and Exchange Commission (SEC) has finally approved the Bitcoin Spot ETF, paving the way for Bitcoin in mainstream finance.
The announcement was made on the U.S. Securities and Exchange Commission official website, a day after a premature announcement was leaked by a hacker on the sec `s x page on January 9th.causing a whipsaw action on BTC`s price .
Multiple asset managers have applied for bitcoin ETFs since 2013, but had since been rejected by the SEC siting vulnerable to market manipulation as a key concern.
This changed on January 10th when the the securities regulator approved over 11 Btc Etf`s.
The 19b-4 applications from major firms on wall street spear headed by BlackRock the largest asset manager on the globe alongside other applications from other firms namely; ARK 21Shares, Invesco Galaxy, VanEck, Wisdom Tree, Fidelity, Valkyrie, , Grayscale, Bitwise, Hashdex and Franklin Templeton,
This means spot Bitcoin ETF will be officially listed and traded on the respective exchanges
What is the Spot Bitcoin EFT?
For those who are not familiar with it.
The spot bitcoin exchange-traded fund (ETF) is an investment vehicle that allows ordinary investors exposure to the price moves of bitcoin in their regular brokerage accounts without having to officially own a Bitcoin.
Unlike regular bitcoin ETFs, in which bitcoin futures contracts are the underlying asset, bitcoins are the underlying asset of a spot bitcoin ETF`s.
Each spot bitcoin ETF is managed by a firm that issues shares of its own bitcoin holdings purchased through other holders or through an authorized cryptocurrency exchange.
The shares are listed on a traditional stock exchange
What does this mean for the future n bitcoin and crypto.
Key Benefits of The ETFs
This news caused great excitement in the cryptocurrency world and raised high expectations for Bitcoin’s future in mainstream finance. More so siting two major key benefits for the approval of this etf to BTC and the crypto market at large
The bridge to mainstream adoption
ETFs can help bridge this gap between traditional finance and the crypto market, making it more accessible to mainstream investors who don’t have a formal way of investing in Crypto.
Asset managers like BlackRock have notably filed for a Bitcoin Spot ETF recently in hopes of bringing the asset class to a wider audience and creating a financial instrument in which they can invest billions of dollars.
Market stability
The second key benefit is the provision can lead to market stability around Bitcoin. Institutional adoption and regulatory approval provide confidence to investors, contributing to a more mature and stable market. Contrary to what the crypto currency market has faced in the previous years.
This easily applies to all other Cryptocurrencies with various ETFs getting launched in the near future. Lessening the pump and dump scenarios that have been witnessed over the years in these crypto currencies.
