{"id":521279,"date":"2024-01-11T07:57:14","date_gmt":"2024-01-11T05:57:14","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=521279"},"modified":"2024-01-11T08:00:17","modified_gmt":"2024-01-11T06:00:17","slug":"big-win-for-bitcoin","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cryptocurrency\/521279-big-win-for-bitcoin.html","title":{"rendered":"Big win for Bitcoin"},"content":{"rendered":"

US regulators for the first time approved exchange-traded funds that invest directly in Bitcoin, a move heralded as a landmark event for the roughly $1.7 trillion digital-asset sector that will broaden access to the largest cryptocurrency on Wall Street and beyond.<\/p>\n

The Securities and Exchange Commission, whose three-part mandate includes investor protection,\u00a0authorised<\/a><\/strong> funds from industry heavyweights BlackRock, Invesco and Fidelity to smaller competitors including Valkyrie to begin trading Thursday.<\/p>\n

The approvals mark a rare capitulation by the SEC following opposition that lasted for more than a decade, ever since Tyler and Cameron Winklevoss first proposed a Bitcoin ETF in 2013.<\/p>\n

BlackRock Inc.\u2019s\u00a0surprise<\/strong>\u00a0<\/a>application last June, followed by an appeals court ruling that called the denial of a different application \u201carbitrary and capricious,\u201d triggered a blistering rally in the cryptocurrency amid speculation that US regulators would finally give their blessing to the structure.<\/p>\n

\u201cWhile we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin,\u201d SEC Chair Gary Gensler said in\u00a0a statement<\/a><\/strong>.<\/p>\n

\u201cInvestors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.\u201d<\/p>\n

Previous Rulings<\/h2>\n

At the crux of the SEC\u2019s previous rulings against a spot ETF was the argument that no regulated exchange was able to adequately monitor Bitcoin trading in a way that would reliably detect fraud and manipulation.<\/p>\n

That contention was opposed by Cathie Wood\u2019s Ark Investments, among others, which provided data showing a high correlation between cash trading and the futures contracts that trade on CME Group\u2019s platform.<\/p>\n

In reviewing the latest set of proposals, the SEC said it examined the correlation between spot and futures trading at a variety of time intervals and concluded prices moved in such a way that irregularities on exchanges such as Kraken and Coinbase were likely to show up in the futures.<\/p>\n

\u201cBecause the CME\u2019s surveillance can assist in detecting those impacts on CME Bitcoin futures prices, the exchanges\u2019 comprehensive surveillance-sharing agreement with the CME \u2014 a U.S. regulated market whose Bitcoin futures market is consistently highly correlated to spot Bitcoin, albeit not of significant size\u2019 related to spot Bitcoin \u2014 can be reasonably expected to assist in surveilling for fraudulent and manipulative acts and practices in the specific context of the proposals,\u201d the order said.<\/p>\n

False Post<\/h2>\n

The decision comes a day after a\u00a0false post<\/a>\u00a0<\/strong>on the SEC\u2019s X account claimed that the agency had approved the ETFs.<\/p>\n

The regulator subsequently said that the account had been compromised, causing the price of Bitcoin to fluctuate widely.<\/p>\n

Gensler voted alongside the agency\u2019s two Republicans to back exchanges\u2019 plans to list the products, the SEC\u2019s\u00a0website showed<\/a><\/strong>.<\/p>\n

The regulator\u2019s two other Democrats voted against the proposals.<\/p>\n

Speaking in an interview on Bloomberg Television\u2019s \u201cBalance of Power,\u201d Hester Peirce, one of the agency\u2019s GOP members, said she was \u201cdelighted\u201d with the result.<\/p>\n

\u201cThere are still pieces of it to go, but this is a big milestone,\u201d Peirce, who has been one of the industry\u2019s most vocal supporters in Washington, said.<\/p>\n

\"\"<\/p>\n

Bitcoin briefly scaled $47,000 in a generally muted climb following the approvals. It was trading at $46,480 as of 12:42 p.m. Thursday in Singapore.<\/p>\n

The original cryptocurrency, which sank 64% in 2022, more than doubled in 2023 in large part because of speculation that the SEC would eventually approve ETFs.<\/p>\n

The products allow investors to get exposure to the token in traditional brokerage accounts instead of via crypto-native startups that have come under increasing government scrutiny following a series of scandals and bankruptcies.<\/p>\n

Retail, Institutional Investors<\/h2>\n

\u201cThe approval means that both retail and institutional investors now have the ability to diversify their portfolio with crypto exposure without worrying about the complicated issues of custody,\u201d said Campbell Harvey, finance professor at Duke University. \u201cThe ETF makes it easy to add to your portfolio.\u201d<\/p>\n

Crypto proponents have for years argued that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and would help bring the industry closer to the more highly regulated world of traditional finance.<\/p>\n

It also suggests a sort of milestone of maturity for the relatively nascent industry, where skirmishes with regulators came to a climax after the collapse of Sam Bankman-Fried\u2019s FTX empire highlighted risks lurking in the industry.<\/p>\n

The landmark decision comes after Grayscale Investments won a key victory over the SEC.<\/p>\n

A federal appeals court had\u00a0overturned<\/a><\/strong>\u00a0the rejection of Grayscale\u2019s application to convert its Bitcoin trust into an ETF.<\/p>\n

The court called the denial \u201carbitrary and capricious\u201d because the commission failed to explain its different treatment of similar products. ETFs that hold Bitcoin futures were approved in 2021.<\/p>\n

The SEC\u2019s loss to Grayscale was one of the reasons why the SEC approved the applications, Gensler said in Tuesday\u2019s statement.<\/p>\n

\u201cBased 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,\u201d Gensler said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The decision comes a day after a\u00a0false post\u00a0on the SEC\u2019s X account claimed that the agency had approved the ETFs.<\/p>\n","protected":false},"author":341034,"featured_media":480467,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44696],"tags":[187,73436,17960,67814,11979,72702,91861,89144],"class_list":["post-521279","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-bitcoin","tag-bitcoin-etf","tag-blackrock","tag-exchange-traded-funds-etfs","tag-fidelity-investments","tag-gary-gensler","tag-invesco","tag-us-securities-and-exchange-commission"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/521279"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=521279"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/521279\/revisions"}],"predecessor-version":[{"id":521289,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/521279\/revisions\/521289"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/480467"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=521279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=521279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=521279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}