It’s here. The U.S. Securities and Exchange Commission (SEC) made an omnibus decision today to approve a host of spot bitcoin ETF applications.
More than 10 years after the first filing for a crypto-based exchange-traded fund, a type of financial product designed to track other assets like commodities and equities, the SEC has decided to approve the first ETFs that follow the spot market price of bitcoin.
For full coverage of bitcoin ETFs, click here.
See also: How to Buy a Bitcoin ETF
Larry Fink, the CEO of the world’s largest asset manager BlackRock, has said the firm filed to list a bitcoin ETF last year specifically because there was clear customer demand for something like it. That decision opened the floodgates, with a number of competing applications soon following.
All of this remains to be seen, but now, with the SEC’s decision to approve 11 of the 13 bitcoin ETF applications, the world will. CoinDesk spoke to a number of experts — traders, executives and analysts — to get their take on what this moment means for the entire crypto industry going forward.
Sergey Nazarov, co-founder, Chainlink: "Bitcoin ETF approval has made it clear that traditional financial institutions have a significant role to play in determining how the crypto markets evolve. This was evident when PayPal launched the ability to buy certain cryptocurrencies, and some banks started offering crypto custody. The approval of the [spot] Bitcoin ETF will lead to an influx of traditional large top-tier financial firms like BlackRock and Fidelity, which will likely actively participate in the crypto markets."
Gavin Michael, CEO, Bakkt: "Today's SEC approval of a spot BTC ETF represents a significant milestone for the industry, and it is my hope that it signals a new era of regulated crypto products offered by reputable, trusted crypto companies. This ETF approval has the potential to not only accelerate market adoption but also to foster lasting momentum within the industry. As we move forward with more ETF applications, it is essential for ETF providers to collaborate with qualified custodians who have a proven track record in safeguarding digital assets like BTC. This collaborative approach is crucial in reducing risks and creating a secure environment for investors."
Kristin Smith, CEO, Blockchain Association: "The approval of a Bitcoin ETF adds more pressure on Congress to pass fit-for-purpose legislation for the digital asset ecosystem. Consumer demand is poised to grow exponentially and those consumers, investors, and entrepreneurs deserve clear regulations that address many of the outstanding questions the industry has been urging our elected officials and regulators to answer."
James Angel, associate professor, Georgetown University: "If the SEC is anti-crypto, they have shot themselves in the head. If they had just quietly approved the Grayscale [ETF application] all those many years ago, there would be a few crypto ETFs out there without much fanfare. By delaying as long as they have, they are creating a lot more free publicity for crypto. Also, they appear to be consciously setting it up so that multiple ETFs will start trading at the same time. Whatever the reason, they are invoking the marketing might of the biggest behemoths on Wall Street to start peddling these ETFs. Expect to see lots of advertising pushing various crypto products. If the SEC doesn't want Mr. and Mrs. Main St to invest their IRAs in crypto, the SEC chose exactly the wrong approach."
Cami Russo, founder of The Defiant: "It's great that an ETF makes holding Bitcoin easier for institutions, but ultimately we're packaging bitcoin in a fund, so that intermediaries can sell them to investors, when crypto should be about pushing investors in the opposite direction, and getting them comfortable with non custodial and permission-less solutions."
Anil Lulla, CEO, Delphi Digital: "Now the process will be straightforward to buy Bitcoin for retirement accounts with much lower fees. Today is the last day ever where the only people incentivized to shill $BTC and crypto are us in the community. Tomorrow, all these ETF issuers will have teams of people incentivized to call our parents/grandparents up to talk about Bitcoin. And the competition will be fierce. Especially in this first year, once a frontrunner is obvious, it will continue to get an outsized portion of inflows into these ETFs. Because of this, the fees will be a race to near zero. You've already seen this start to happen."
Molly White, author of the Citation Needed newsletter: "Even the bitcoin ETFs are approved and it fails to have significant price impact, I think we will still all be able to celebrate bitcoin achieving an important milestone towards its original goals. Finally, people will be able to turn their money into an
anonymous peer-to peer asset outside of government control, to which they own their own keys and thus control completely, with out having to involve powerful financial institutions like BlackRock."
Cory Klippsten, CEO, Swan Bitcoin: "The top-of-funnel for Bitcoin is now represented by the most established and trusted Wall Street institutions which will proceed to spend hundreds of millions of dollars extolling the virtues of Bitcoin, and only Bitcoin. Now that the primary entry points for Bitcoin exposure do not include appeals to gamble with hundreds of dubious crypto tokens, we just might see the end of massive crypto pump-and-dump cycles."
Lex Sokolin, managing partner, Generative Ventures: "I’m excited to see capital flow into the Bitcoin ecosystem at a time where more programmability and functionality is available. From payments companies building on top of Lightning to inscriptions allowing for tokenization of text and images, it’s exciting to see Bitcoin reflecting the broader potential pioneered by Web3. My hope is that the story continues to shift from store of value to global financial infrastructure."
See also: Bitcoin ETFs: The Bull Case
Preston Byrne, partner, Brown Rudnick: "Spot ETF approval is going to prove as consequential for the crypto markets as the advent of securitization in the 1980s was to the credit markets. It’s the first time that there’s been a bridge between TradFi and crypto other than ACH. The space is going to get a lot bigger, very quickly, more quickly than I think most people currently in the space are prepared for."
Yiannis Giokas, senior director, Moody’s Analytics (risk and analytics arm): "The SEC's approval of bitcoin spot ETFs marks a significant step towards the institutionalization of cryptocurrency, expanding bitcoin's accessibility to a wider audience in a more regulated and simpler manner. Such an ETF could lead to increased demand for bitcoin, and enhance both price discovery and market liquidity. However, this development also brings certain risks. The notorious price volatility of bitcoin, as well as its fluctuating values against stablecoins and other cryptocurrencies, could expose mainstream investors to a less familiar spectrum of investment risks."
Cynthia Lo Bessette, head of digital asset management at Fidelity: "We’ve long believed a spot-priced exchange traded-product would be an efficient way for investors to gain exposure to bitcoin. Fidelity has engaged in constructive dialogue with the SEC for years, and the affirmation of this approval signals positive momentum for the industry, and increased choice for investors who want to engage with digital assets. As a firm, we remain committed to meeting the growing demand from investors by providing them with tools that support their choices and facilitate secure access to markets."
Andrew Rossow, attorney and CEO of AR Media: "This level of confidence in a bitcoin ETF being approved isn’t something to take lightly, because of the high-level demand that the market has been begging for in establishing some initial regulatory framework with respect to digital assets and modern day securities law. The frustration with the SEC’s internal infrastructure and understanding of this emerging digital finance sector has only been met with short-sightedness, leaving not just the SEC on autopilot, but also leaves consumers, financial institutions and retail investors, and now regulators vulnerable to exploits that only serve to hinder market growth and cap the expansion rate with these emerging markets and technologies in our digital age.
"Whether SEC Chair Gary Gensler likes it or not, the system must change with respect to securities laws, because the domestic and international markets have changed (and are actively adapting). The SEC can no longer hide behind its fear of market manipulation, an irony in which the SEC has actually been manipulating the market by resisting natural progression. As we saw today, this market will always try to self-correct, even if it comes in the form of mundane black hat cyber attacks."
Samuel Armes, founder, Florida Blockchain Association: "I think at the end of the day, these ETFs are going to bring a bunch of money into the space. It's going to make the price go up. It's going to make more people involved. But, I also think it's going to start the division between actually being able to hold your keys and having, you know, synthetic bitcoin. So, I think most people will opt to just buy and hold the ETF. I think a lot of boomers in the older generation will never self custody their bitcoin, which is obviously antithetical to the mission [of the token], but they just want to get involved in it now [that bitcoin is back]. So, the base layer mission of Bitcoin of sovereign independence and freedom money will take a hit. But, the price is still coming to work, and adoption — quote-on-quote — will go up as well, whatever that means."
Nathan McCauley, CEO and co-founder, Anchorage Digital: "A spot bitcoin ETF marks the end of crypto as a "novel" asset class — and the beginning of a world where it can be part of every portfolio. SEC approval opens the floodgates for trillions of dollars to safely flow into the digital asset ecosystem via a regulated and accessible wrapper that suits consumers and institutions of all types."
Sheila Warren, CEO, Crypto Council for Innovation: "A spot bitcoin ETF isn’t just a financial instrument. It’s a significant and practical move towards integrating crypto into the mainstream. This move helps make this revolutionary technology more accessible to all.
- Regulatory evolution: The introduction of a spot bitcoin ETF isn’t just about market dynamics, it’s a catalyst for regulatory evolution. It necessitates a framework that accommodates the unique nature of crypto, potentially leading to more appropriate and informed regulatory policies in the crypto space.
- Increased legitimacy: This milestone will shift public perception, painting bitcoin as a legitimate component of a diversified investment portfolio
- Democratizing access: A spot bitcoin ETF is a bridge between traditional finance and the burgeoning world of crypto. Allowing investors to partake in the Bitcoin journey without the technical hurdles of direct ownership is a significant step towards inclusivity.
- Innovative financial landscapes: A spot bitcoin ETF is a precursor to a plethora of innovative financial products and services that straddle the line between traditional finance and cryptocurrencies, expanding the horizon for what’s possible within the crypto ecosystem
- Market dynamics: The ripple effects of a spot bitcoin ETF could lead to a recalibration of market dynamics, aligning them closer to traditional financial markets, yet retaining the distinct characteristics of the crypto world."
Yoni Assia, CEO and Co-founder of eToro: “The term ‘watershed moment’ can be a cliche, but in the case of today’s bitcoin ETF news, it could not be more justified. For 15 years, bitcoin has been growing in prominence as an asset class amongst retail investors, while in a reversal of traditional roles, institutional investors have remained largely on the sidelines waiting for traditional finance rails to be put in place.
“Today’s news provides an answer for institutional demand for bitcoin. It’s good news for crypto markets and supportive of our belief that bitcoin is an unstoppable technology. It is digital gold and taking a long term view, I believe that it represents the intersection of finance, economics and technology.
“For our users, retail investors, today’s news is positive as it will be supportive of the growth of bitcoin as an asset class, but I believe that the majority of ordinary investors will want to continue to buy and hold real BTC.”
Troy Cross professor of philosophy at Reed College and a fellow at the Bitcoin Policy Institute: "Larry Fink is Constantine, meaning the emperor who converts to Christianity, changing both the empire and the religion forever. You’ll find Christians who think that marked the victory of the church and others who think it ended true Christianity. Same for bitcoin. Bitcoin’s cultural identity, its symbology and associations, are going to change. And this is inevitable but also dangerous, given its cypherpunk roots and its potential as a tool of freedom. Let’s see if bitcoiners can educate about permissionlessness, censorship resistance and self-sovereignty when the attention is on NGU [number go up] and the narrative is dominated by trusted intermediaries."
Charles d'Haussy, CEO, dYdX Foundation: "The influx of new capital from institutional investors through Bitcoin Spot ETFs will be amplified in derivative markets. Bitcoin spot ETFs significantly increase the liquidity and total volume of bitcoin traded. This, in turn, shall benefit derivative markets by making it easier and cheaper to hedge positions, enter and exit trades, and execute sophisticated options strategies (crypto derivates markets are about 10x larger than crypto spot markets."
Joshua Davila (aka the Blockchain Socialist), author of "Blockchain Radicals": "The creation of ETFs and the bitcoin institutional financial products that came before are a form of co-optation by the status quo. In case there's any more need for proof that crypto is not immune to being completely subsumed by the financial system it sought to destroy."
Leah Wald, CEO at Valkyrie: "Today’s approval of spot bitcoin ETFs is a landmark moment for the digital asset industry. It’s a bold acknowledgement that crypto is here to stay. This would not have been possible without nearly a decade of work and commitment from countless people who believe in the future of our industry and see crypto as an integral part of the global financial ecosystem. I am excited for what’s in store for the future, the launch of the ETFs is just the beginning of continued widespread adoption and education of what is possible with crypto."