The U.S. Securities and Exchange Commission (SEC) approved the long-awaited spot Bitcoin exchange-traded fund (ETF), marking a milestone for the world’s biggest cryptocurrency and the wider crypto industry.
The approval came after a brief period of confusion in the market, where a post made from the SEC’s Twitter (X) account announced the approval of the first U.S.-listed ETF on Tuesday. After the news, the price of bitcoin (BTC) rose more than $1,000, or 2.5%, to $47, 901.
Moments later, the SEC said its account had been hacked and the tweet was “unauthorized.” Bitcoin plunged by about 7% to $44,000 soon after. On Wednesday, however, the SEC said it had approved all the 11 spot Bitcoin ETF applications, including from BlackRock, the world’s largest asset manager.
Also read: Why Bitcoin Soars High on ETF Hype
Bitcoin ETFs start trading
ETFs from other established players such as Fidelity, Grayscale, Van Eck, Invesco and Ark Invest have also been approved. The first funds will start trading on Thursday, exchanges said. BlackRock is expected to ring the opening bell on Nasdaq to mark the start of trades for its iShares Bitcoin Trust.
A bitcoin ETF will generally track the price of BTC, allowing investors to gain exposure to the digital asset, but without actually having to buy it directly themselves. Investors may tend to lean towards ETFs because, among other reasons, its a much easier way to get into bitcoin.
The approval comes after months of anticipation and a bitter legal battle. SEC Chair Gary Gensler said he approved the Bitcoin ETF largely because of his loss in court to Grayscale.
“I have often said the Commission acts within the law and how the courts interpret the law,” Gensler said in a statement after the ETF approval “One of those filings, made by Grayscale, contemplated the conversion of the Grayscale Bitcoin Trust into an ETP.”
Gensler said after the court reprimanded the SEC for failing to “adequately explain its reasoning for disapproving” Grayscale’s proposed exchange-traded fund, he now “feels the most sustainable path forward is to approve the listing and trading of these spot Bitcoin ETP shares.”
The regulator’s approval is expected to usher in a new era of the liquid crypto token, as spot bitcoin ETFs have been available in other markets. As a result of this approval, U.S. institutional and retail investors will be able to gain direct exposure to the coin through a regulated product. These investors can now gain direct exposure without the risks of buying from unregulated exchanges or the higher costs associated with ETFs that invest in bitcoin futures.
The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— Gary Gensler (@GaryGensler) January 9, 2024
SEC account was compromised
The SEC X (formerly Twitter) account was compromised, and an unauthorized tweet was posted. The Securities and Exchange Commission (SEC) has not approved the listing and trading of spot bitcoin exchange-traded products.
Several people had expected the regulator to release its decision on a spot Bitcoin ETF in the next two days after several asset managers concluded their application filings. However, the SEC may still approve a spot Bitcoin ETF, although the social media post was false.
Concurrently, neither Gensler’s nor the SEC’s tweet stated the commission’s plans to approve or reject the spot Bitcoin ETF applications. By Jan. 10, a decision is expected on the spot Bitcoin ETF from ARK Invest and 21Shares, and some experts believe this could lead to more approvals for other managers.
Some social media users believed the information contained in the retracted SEC tweet was true, but it was only released prematurely.
X responds to the SEC’s tweet
X said it had completed a preliminary investigation into the false tweet on SEC’s account and discovered that it was not due to a breach of their systems. According to X, the compromise was not due to any security breach of X’s systems but rather due to an unidentified individual obtaining control over a phone number associated with the SEC account through a third party.
Additionally, investors anticipate the SEC’s announcement on the potential approval of spot Bitcoin ETFs, which is expected this week. The SEC’s’ decision would mark a key milestone for the crypto market in gaining acceptance in mainstream financial markets.
Lawyers call on Congress to demand an investigation into SEC’s tweet
Lawyers and senators from the United States have called on Congress to demand an investigation into the SEC after its X account was reportedly compromised. U.S. Senator Bill Hagerty, in a Jan. 9 X post, said that it was unacceptable and Congress needs answers on what happened.
However, some others believed that the SEC’s X account breach was a potential market manipulation event, which the SEC should protect investors against.
Lot of bad takes about this being official approval. This is not an approval. Its a request for acceleration. My tweet would have WAY more caps and way more aggressive language if it were an approval order. haha
— James Seyffart (@JSeyff) January 10, 2024
Despite the market confusion, the Chicago Board of Mercantile Exchange (CBOE) has approved four potential spot Bitcoin ETFs for trading on its platform. However, this is pending the green light from the United States Securities and Exchange Commission (SEC).