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Some asset managers give the green light to launch a spot Bitcoin exchange-traded fund as early as this afternoon, despite confusion caused by a fake social media post claiming approval had already been granted on Tuesday. is expected to be obtained.
The incident brought new scrutiny to the Securities and Exchange Commission, which late Tuesday said that X’s government account (previously known as Twitter) was hacked and the Spot Bitcoin ETF was listed and traded. I had no choice but to announce that I did not approve of it.
The SEC said the agency’s @SECGov
of @SECGov A Twitter account has been compromised and fraudulent tweets have been posted. The SEC has not approved the listing and trading of spot Bitcoin exchange-traded products.
— Gary Gensler (@GaryGensler) January 9, 2024
Platform
The hack and subsequent communications at the SEC, an aggressive foe of the crypto world led by Chairman Gary Gensler, have prompted calls in Washington to take a closer look at the agency.
“The United States is home to the world’s deepest and most liquid capital markets, and stability and soundness are essential for investors to maintain confidence in our markets,” said Republican Sen. J.D. Vance. Thom Tillis said in a letter to Gensler on Tuesday evening.
“It is unacceptable for an agency tasked with regulating the capital markets capital of the world to make such a grave mistake.”
Despite the confusion, some potential issuers that have filed with the SEC still expect approval.
Four of those applicants told Yahoo Finance early Tuesday that they expect the SEC to approve their applications sometime Wednesday and, based on that timing, trading could begin as early as Thursday. He said he is doing so.
After the hack, several people said they expected it to be approved again today.
Valkyrie Funds Chief Investment Officer Stephen McClurg told Yahoo Finance on Wednesday morning, “I’m still hoping for a launch tomorrow,” adding that the chance of approval was “95%.” Valkyrie is also one of the applicants.
In another sign that trading may begin soon, the Chicago Board of Options Exchange (CBOE) has asked the SEC to accelerate the listing registration of a Bitcoin ETF by one of the applicants, Ark21Shares. .
The cryptocurrency industry sees these ETFs as a way to gain mainstream acceptance. The product allows everyday investors to gain exposure to Bitcoin without owning it, allowing them to trade it just like stocks.
It could also mean Bitcoin could become a mainstay in 401(k)s, IRAs, and pension plans.
We received 12 applications from 14 asset management companies, with a list that includes Wall Street giants from BlackRock (BLK) to Franklin Templeton (BEN), as well as many well-known names in the crypto world. of companies are included.
These issuers compete with each other in the preliminary stages of setup to offer the lowest fees in hopes of attracting as many investors as possible once the ETF begins trading.
Other major Wall Street firms are expected to join in the effort as well. JPMorgan Chase (JPM) and Goldman Sachs (GS) are among the big banks that have offered to help some of these asset managers create and redeem shares in new funds.
Optimism about these approvals led Bitcoin to soar 164% in 2023 and start 2024 above $47,000, an almost two-year high.
Amid the chaos and confusion caused by the SEC hack, the price fell the previous day and is currently hovering around $45,000 after soaring to nearly $48,000 on Wednesday afternoon.
10 years of efforts
The cryptocurrency industry has been waiting for this moment for over a decade.
The first application to create a Spot Bitcoin ETF was brought in 2013 by crypto entrepreneurs and twins Tyler and Cameron Winklevoss, famous for their early roles in the creation of Facebook.
Since then, the SEC has rejected more than 30 similar applications, citing the products as vulnerable to market manipulation.
A key turning point came last June, when BlackRock, the world’s largest asset management company, applied for a spot Bitcoin ETF. The interest from Wall Street giants has prompted other asset managers to follow suit.
Another important development came last August when one of the ETF applicants, Grayscale Investments, won a significant legal victory against the SEC. Grayscale sued the SEC in 2022 after it was not allowed to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin product.
Its central claim was that the agency had already approved an exchange-traded product holding Bitcoin futures contracts and therefore “acted arbitrarily and capriciously.”
A three-judge panel of the District of Columbia Court of Appeals in Washington sided with Grayscale, finding “significant evidence” that the company’s product is similar to a Bitcoin futures ETF previously approved by the SEC. ” was obtained by the company.
This forced the SEC to reconsider Grayscale’s Spot Bitcoin ETF application, as well as other applications filed by rival asset managers.
The SEC’s first deadline to consider these various ETFs is today, leading up to a joint offering by Ark Invest and 21Shares. Other deadlines are until April.
ETF issuers and analysts said they believe the SEC will choose to approve all applications received by today’s deadline to avoid giving first movers an advantage over others in the industry. Ta.
Cathie Wood, CEO of Ark Investment Management, one of the applicants, told Yahoo Finance that the leading provider of spot Bitcoin ETFs is the company that receives the most money from investors in the first place. He said it would happen.
The winners “will be few, but they will be the most liquid,” she said.
Historically, the launch of other Bitcoin products has caused the price of Bitcoin to skyrocket.
This happened in 2017 with the launch of the country’s first Bitcoin futures contract, and in 2021 when the SEC approved the first Bitcoin futures ETF. The price soared, but then dropped significantly the year after its release.
In recent weeks, there has been a lot of debate about whether Bitcoin will rise or fall after its much-lauded moment of recognition.
Gautam Chughani, managing director of research at AllianceBernstein, said his team expects these products to attract more than $10 billion in investment flows by the end of 2024, with “hundreds of billions of dollars” over two years. He said he would collect them.
He added that this would push the price of Bitcoin even higher.
“We believe Bitcoin will reach $150,000 by 2025,” Chugani added.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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