The cryptocurrency industry starts in 2024 with a massive win. The SEC approved multiple spot Bitcoin ETFs on Wednesday (10th January 2024). This is a major development of the industry’s adaptation to the broad financial markets and institutional investors in particular. While there were already multiple relevant ways to obtain crypto, e.g. through mutual funds, Bitcoin Futures ETFs, and Grayscale’s Bitcoin Investment Trust, it brings more regulatory clarity to the industry, which is still an important issue and prevents some investors from entering the space. This could also open the door for further crypto ETFs, such as Ethereum ETFs, in the future. However, the SEC clearly stated this approval does not constitute an opinion on cryptocurrencies as a whole or any individual tokens, which remain largely considered investment contracts that fall under the federal securities law.
This development is especially notable, due to the amount of time it took. In 2013, the Winklevoss twins filed for a Spot Bitcoin ETF, which was denied in 2017. Many other ETF providers filed for approval during the following years, which were also declined. In August 2021, the Chair of the SEC mentioned that they would look favourably on ETFs based on Bitcoin Futures instead of spot Bitcoin, largely due to the underlying regulatory clarity futures provide over cryptocurrencies. Following this development, the first Bitcoin Future ETFs were approved in October 2021. Then in 2022, Grayscale Investment filed for a potential conversion of the Bitcoin Trust to an ETF, which the SEC declined. Following this decision, Grayscale sued the SEC for their “arbitrary and capricious” explanation. In August 2023, judges ruled in favour of Grayscale, which led to increasing optimism on spot Bitcoin approvals and the eventual approval in 2024.