The U.S. Securities and Exchange Commission (SEC) has approved the first exchange-traded funds (ETFs) that track the price of bitcoin, marking a major breakthrough for the cryptocurrency industry. 11 ETFs were simultaneously approved Wednesday January 10, 2024 by the SEC signaling a positive shift in the overall acceptance of digital assets.
The significance of these ETF approvals means investors can now buy and sell shares of ETFs that hold actual bitcoin, without having to deal with the hassles and risks of owning the digital currency directly. They can also access the ETFs through their existing brokerage accounts, which are regulated and secure. Investing in ETFs, potential tax issues can arise that were not applicable to holding BTC directly.
Before the landmark approval, the SEC had previously denied several applications for bitcoin ETFs, citing concerns about market manipulation and fraud. However, an appeals court ruling between Grayscale Investments and the SEC in August forced the SEC to reconsider its position and ultimately approve the application of Grayscale Investments along with several other asset managers including Bitwise, ARK Investments, BlackRock and Fidelity.
While the approval of the first ETFs that track the price of bitcoin by the SEC is seen as a significant milestone for the cryptocurrency industry, there is still a long way to go before digital assets are widely accepted as a legitimate financial product. Despite the breakthrough, there is still a lot of hesitation when it comes to digital assets, and it could take years before they gain broad acceptance.
Authors: Vincent Greenberg, CPA | [email protected] and Joshua Pagano, CPA | [email protected]
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