The SEC has approved a list of ten exchange-traded products (ETP) that directly invest in the most popular cryptocurrency in the market, bitcoin, as announced by its chairman Gary Gensler in a statement.
“Today, the Commission approved the listing and trading of a number of spot bitcoin exchange-traded product (ETP) shares,” Gensler commented.
The measure is seen as a milestone for the digital asset sector of approximately $1.7 trillion, which will expand access to the cryptocurrency on Wall Street and other markets.
The funds will be able to start trading from this Thursday, January 11th.
The approvals also mark the end of over a decade of opposition from the SEC, since Tyler and Cameron Winklevoss first proposed a bitcoin ETF in 2013.
Last June, BlackRock made a request, which was initially denied but then supported by a ruling from an appeals court that called the denial “arbitrary and capricious.”
“I have often said that the Commission acts within the law and how the courts interpret the law. Beginning under Chair Jay Clayton in 2018 and through March 2023, the Commission disapproved more than 20 exchange rule filings for spot bitcoin ETPs,” added the chairman of the regulatory.
Gensler said that in the face of a new series of applications similar to those the SEC had already disapproved, the circumstances have changed.
“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,” detailed the chairman.
In addition, Gensler clarified that “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.”
On the other hand, he emphasized that “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.”
Currently, investors can already buy and sell bitcoin in a number of brokerages, through investment funds, on national stock exchanges, through peer-to-peer payment applications, on non-compliant cryptocurrency trading platforms, and of course, through Grayscale Bitcoin Trust, says the SEC.
The commission clarifies that the action approved on January 10th will include certain protections for investors.
First, sponsors of bitcoin ETPs will be required to provide full, fair, and truthful disclosure about the products. Investors in any bitcoin ETP that is listed and traded will benefit from the disclosure included in public registration statements and required periodic filings. While these disclosures are required, it is important to note that today’s action does not endorse the disclosed ETP arrangements, such as custody arrangements.
Second, these products will be listed and traded on registered national securities exchanges. Such regulated exchanges are required to have rules designed to prevent fraud and manipulation, and we will monitor them closely to ensure that they are enforcing those rules. Furthermore, the Commission will fully investigate any fraud or manipulation in the securities markets, including schemes that use social media platforms.[3] Such regulated exchanges also have rules designed to address certain conflicts of interest as well as to protect investors and the public interest.
Further, existing rules and standards of conduct will apply to the purchase and sale of the approved ETPs. This includes, for example, Regulation Best Interest when broker-dealers recommend ETPs to retail investors, as well as a fiduciary duty under the Investment Advisers Act for investment advisers. Today’s action does not approve or endorse crypto trading platforms or intermediaries, which, for the most part, are non-compliant with the federal securities laws and often have conflicts of interest.
Third, Commission staff is separately completing the review of registration statements for 10 spot bitcoin ETPs simultaneously, which will help create a level playing field for issuers and promote fairness and competition, benefiting investors and the broader market.
The decision comes a day after a false post on the SEC’s X account (former Twitter) claimed that the agency had approved ETFs. The regulator later said the account had been compromised, causing a significant fluctuation in the price of Bitcoin.
