The cryptocurrency industry is on the edge of a significant decision as the U.S. Securities and Exchange Commission (SEC) is set to decide on the approval of the first Bitcoin Exchange Traded Fund (ETF) on January 10. The approval is seen by many observers as a mere formality, and the anticipation has driven Bitcoin’s price to a new high of nearly $47,000.
It is likely that the SEC will approve several or even all twelve ETF applications to avoid giving any single provider a head start. This decision is seen as a landmark for cryptocurrencies like Bitcoin and Ether, determining whether they will be recognized as legitimate asset classes by the established financial industry or continue to exist as dubious niche products.
Crypto enthusiasts hope that a regulated financial product like an ETF will allow traditional banks, pension funds, and ordinary small investors to participate in Bitcoin’s price development without having to deal with the technical details such as setting up and managing wallets.
However, even though market observers expect an approval with a probability of over 90%, a surprise is possible. The SEC and its head, Gary Gensler, are known to be quite crypto-skeptical. Last year, they initiated proceedings against industry flagships like the trading platforms Binance and Coinbase. There is likely to be continued resistance within the SEC against the approval of a Bitcoin-backed ETF.
One of the main issues has been the risk of market manipulation. However, Benjamin Dean, Director of the Digital Assets Team at asset manager Wisdom Tree, believes these concerns have been addressed with the introduction of surveillance agreements with regulated trading venues like Nasdaq, Coinbase, or the Chicago Options Exchange.
There has also been debate about how ETF investors can be paid out. The SEC has insisted that redemptions cannot be made in the fund currency Bitcoin, but must be carried out in fiat money. This makes the redemption process safer, but also more cumbersome and therefore more expensive, which will primarily affect private investors.
The approval process has been a gauntlet for the ETF providers. There is a lot of uncertainty in the days leading up to the decision. It doesn’t take much to knock Bitcoin off course. Last week, for example, an analyst report caused a flash crash, with Bitcoin briefly losing 7%. According to the report, all applications could be rejected because key prerequisites are still not met.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇺🇸 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Cathie Wood, Christopher Mellor, Benjamin Dean, Eflamm Mordrelle |
| Companies | Blackrock, Wisdom Tree, SEC (U.S. Securities and Exchange Commission), 21 Shares, Binance, Coinbase, Invesco, Ark Investment Management |
| Currencies | US Dollar, Lido Staked Ether, Bitcoin |
| Securities | Blackrock, Wisdom Tree, Ark, 21 Shares, Invesco |
