In a landmark decision on January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved the listing and trading of spot bitcoin exchange-traded products (ETPs).
- •This move marks a significant shift in regulatory stance and has far-reaching implications for both retail and institutional investors in the cryptocurrency market.
- •SEC Chair Gary Gensler, in a statement, highlighted the Commission’s commitment to acting within the confines of the law and court interpretations.
- •The approval comes after a series of disapprovals under the leadership of former Chair Jay Clayton, spanning from 2018 to March 2023, including a notable filing by Grayscale for the conversion of the Grayscale Bitcoin Trust into an ETP.
The turning point was a legal challenge that resulted in the U.S. Court of Appeals for the District of Columbia vacating the Commission’s disapproval of Grayscale’s proposed ETP. This forced a reconsideration of the regulatory stance, leading to the approval of 11 spot bitcoin ETPs. Gensler emphasized that the decision does not signal a broader acceptance of crypto asset securities or a change in the Commission’s views on the majority of crypto assets being subject to federal securities laws.
- •The turning point was a legal challenge that resulted in the U.S. Court of Appeals for the District of Columbia vacating the Commission’s disapproval of Grayscale’s proposed ETP.
- •This forced a reconsideration of the regulatory stance, leading to the approval of 11 spot bitcoin ETPs.
- •Gensler emphasized that the decision does not signal a broader acceptance of crypto asset securities or a change in the Commission’s views on the majority of crypto assets being subject to federal securities laws.
The approved ETPs, holding the non-security commodity bitcoin, will be subject to certain investor protections. Sponsors are mandated to provide full and truthful disclosures about their products through public registration statements and periodic filings. However, it’s crucial to note that the approval doesn’t endorse specific ETP arrangements, such as custody arrangements.
The approval of spot bitcoin ETPs is seen as a watershed moment for the cryptocurrency market. Major players, including Fidelity, Invesco, Grayscale, and Ark Invest, have been granted the green light to list their funds. The significance of this decision extends beyond the crypto community, attracting attention from retail and institutional investors eager to participate in the burgeoning digital asset space.
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