The US SEC Approves 11 Bitcoin Spot ETFs: A Significant Watershed in Encryption Finance and TradFi

On January 11, Beijing time, the U.S. Securities and Exchange Commission announced the approval of the first exchange-traded fund (ETF) in the United States that tracks Bitcoin. This marks an important watershed between encryption finance and TradFi, allowing ordinary investors the opportunity to access Bitcoin.

The SEC has approved the 19b-4 documents submitted by the New York Stock Exchange, Nasdaq, and the Chicago Board Options Exchange, making them officially effective, allowing these markets to list and provide Bitcoin Spot ETF trading as early as the 12th. One day before the approval, the applicants announced they would charge fees to investors and significantly reduce those fees, indicating that an intense battle for investors' funds is about to begin.

A senior ETF analyst predicts that all these ETFs could raise up to $4 billion in funds on their first trading day and raise $50 billion within two years. The SEC has approved applications from 11 companies, including BlackRock, Ark Investments, 21Shares, Fidelity, Invesco, and VanEck. Some products are expected to start trading as early as Thursday.

The SEC chairman stated that this approval is limited to ETPs holding Bitcoin, a non-security commodity, and does not imply that the commission is willing to approve listing standards for encryption asset securities, nor does it indicate the commission's views on the status of other encryption assets under federal securities law.

SEC Commissioner Hester Peirce believes that the logic behind the regulatory agency's previous rejection of Bitcoin Spot ETF applications is "puzzling." She celebrates that American investors have the right to express their views on Bitcoin by buying and selling Spot Bitcoin ETPs. However, Commissioner Caroline Crenshaw disagrees with the approval order, arguing that the Bitcoin spot market is not safe and cannot avoid fraud or manipulation.

These products, developed over a decade, have changed the rules of the Bitcoin game, allowing institutional and retail investors to access the world's largest encryption currency without having to hold it directly, and providing significant momentum to the crypto industry that has been plagued by a series of scandals. An analyst from a certain bank estimates that ETFs could attract between $50 billion and $100 billion in funds this year alone, potentially driving the price of Bitcoin up to $100,000.

As a result of this news, Bitcoin rose by 1% to $46,515. Some analysts pointed out that the market may have already priced in the approval news, with Bitcoin surging more than 70% in recent months due to increasing expectations for the ETF.

The approval marks a major shift in the SEC's attitude, which has rejected Bitcoin ETFs for a decade due to concerns that they are easily manipulated. Last year, after a federal appeals court ruled that the SEC's rejection of Grayscale Investments' application to convert its existing Grayscale Bitcoin Trust into an ETF was wrong, the SEC finally approved the hope for Bitcoin ETF to surge.

ETF trading fees have become a focal point of concern for potential investors. Before approval, various applying institutions have updated their S-1 filings multiple times to change ETF trading fees. The world's largest asset management company, BlackRock iShares, had a fee of 0.12% in the first 12 months, which was raised to 0.25% after 12 months or AUM reaching $5 billion. Fees from other institutions also vary, such as Bitwise, Ark/21Shares, and Fidelity.

The SEC emphasized in its approval statement that these products will be listed for trading on registered national securities exchanges, which must establish rules designed to prevent fraud and manipulation. The SEC will closely monitor these exchanges to ensure they enforce these rules. In addition, existing rules and conduct standards will apply to the trading of approved ETPs, including best interest regulations when brokerage firms recommend ETPs to retail investors.

The SEC pointed out that while it has approved the listing and trading of certain Spot Bitcoin ETP stocks, it has not approved or recognized Bitcoin. Investors should remain cautious about the various risks associated with Bitcoin and products linked to its value and encryption.