The recent development in the cryptocurrency world, the U.S. Securities and Exchange Commission (SEC) granted approval on Wednesday for the inaugural U.S.-listed exchange-traded funds ETF designed to track bitcoin. This marks a significant milestone for the world’s largest digital currency and the broader crypto sector.
The SEC greenlit 11 applications from notable entities such as BlackRock, Ark Investments/21 Shares, Fidelity, Invesco, and VanEck. Despite cautions from certain officials and investor advocates about potential risks, the regulatory nod sets the stage for these ETFs to commence trading, initiating a fierce competition for market dominance.
A decade in the making, these ETFs represent an ideal shift for bitcoin, enabling investors to gain exposure to the leading cryptocurrency without direct ownership. The approval is a substantial support for the crypto industry, which has faced its fair share of challenges and controversies.
“This marks a significant positive step in the institutionalization of bitcoin as an asset class,” remarked Andrew Bond, Managing Director and Senior FinTech Analyst at Rosenblatt Securities.
According to projections from Standard Chartered analysts, these ETFs could attract between $50 billion and $100 billion within the current year alone. Alternative estimates suggest a more conservative inflow of around $55 billion over a span of five years. As of Wednesday, bitcoin’s market capitalization exceeded $913 billion, according to Coin Gecko, while U.S. ETFs collectively held total net assets of $6.5 trillion as of December 2022, as reported by the Investment Company Institute.