The first Bitcoin ETF in the US is approved. What information is worth noting for cryptocurrency enthusiasts?
This morning, 10th of January 2024 (U.S. time), the US Securities Exchange Commission (SEC) approved the first Bitcoin exchange-traded funds (ETFs) to be listed.
That is bad news or good news for investors who own assets in the US financial market. Now let’s learn more about it through the following FinFan article.
A few things worth noting in Gary Gensler's recent announcement about the first spot ETF of Bitcoin (Bitcoin ETP)
First, approving a Bitcoin spot ETF as a requirement for the Securities and Exchange Commission is not mandatory.
In his announcement, the chairman of the Securities Commission mentioned: "We are now faced with a new set of filings similar to those we have disapproved in the past. Circumstances, however, have changed. The U.S. Court of Appeals for the District of Columbia held that the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale's proposed ETP (the Grayscale Order).
The court therefore vacated the Grayscale Order and remanded the matter to the Commission. Based on these circumstances and Those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares."
We can see in this statement that Gary Gensler's approval of this fund was because the previous refusal was not approved by the Court of Appeals for the District of Columbia and did not come from a voluntary decision.
It can be seen that his reluctance to make this decision comes from two reasons:
- Investors' confidence in Bitcoin is growing day by day.
- The US economic situation is getting worse, and investors have lost confidence in assets held in banks or securities of large companies. (Read more about the trust of the American people in the US government and private establishments here).
Second, accepting Spot Bitcoin’s ETF as a trading commodity does not guarantee its security or accept it 100%.
Also in that speech, Gary Gensler affirmed: “Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, bitcoin. It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.
Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws. As I’ve said in the past, and without prejudging any one crypto asset, the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws”.
The above statements show that turning Bitcoin or cryptocurrency into an investable commodity will make it easier for the Securities Commission to make decisions for them when at this time, they only need to grasp the legality of the companies issuing the fund and no longer need to worry about cryptocurrency market manipulation or decentralized trading issues.
Third, Gary Gensler always warns investors about legal issues and manipulation of the cryptocurrency market.
At the end of the speech, Gary Gensler presented his concerns about legal issues as well as price manipulation of current cryptocurrencies: “Though we’re merit neutral, I’d note that the underlying assets in the metals ETPs have consumer and industrial uses, while in contrast, bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing”.
At the same time, always confirm to investors that they will be responsible for their investments related to cryptocurrency: “While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto”.
Conclusion about the first Bitcoin ETF Spot and cryptocurrency world
In short, through the above announcement about accepting the Bitcoin Spot ETF, investors who already trust the cryptocurrency market can feel more secure about the position of these currencies on the stock market. However, this market still has potential risks related to legal issues and price manipulation for the following two reasons:
- The cryptocurrency market is inherently a Defi market (not centralized), so transaction issues arising from this market do not go through any intermediary government agency.
- Part of these projects were initially created to be dishonest and intended to manipulate or misappropriate investors' money: the cases of Do Kwon of Terraform Labs and Sam of FTX or most recently CZ of Binance are typical examples.