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Heading towards approval: The long-awaited ‘spot’ Bitcoin ETF and its impact on retail investing

The SEC could mark history with the approval of the first 'spot' Bitcoin ETF

The cryptocurrency world is on the verge of a crucial US milestone regarding Bitcoin (BTC) ETF.

There is growing confidence that the Securities and Exchange Commission (SEC) could approve the first “spot” Bitcoin Exchange Traded Fund (ETF) as early as January, marking a significant shift in the perception and adoption of cryptocurrencies in the markets. conventional financials.

Sources close to major money management companies revealed that based on recent guidance from SEC officials, the green light is likely to be given around January 10, 2024.

This historic move would be spearheaded by Cathie Wood’s of Ark Investment Management in partnership with 21Shares, being the first applicant for the SEC’s blessing for a “spot” Bitcoin ETF.

In addition to Ark Investment Management, about a dozen other firms, including giants like BlackRock and Fidelity, have filed applications for ETFs that will be valued based on the real-time price of the digital asset.

The approval of a “spot” Bitcoin ETF would mean greater exposure for retail investors to the world’s leading cryptocurrency at a lower cost than already approved futures-based ETFs.

This would allow investors to access Bitcoin through highly regulated management firms while trading on reputable exchanges such as the New York Stock Exchange and Nasdaq.

However, the path to ETF approval is not without obstacles

The SEC is requiring an unusual structure for these ETFs, insisting that applicants use cash instead of the underlying asset, which could have tax implications and a more complicated process for investors.

The reasons behind this preference for cash transactions could be related to the SEC’s concerns about money laundering and market manipulation in direct cryptocurrency transactions carried out by large brokers such as Robinhood and Fidelity.

Bitcoin ETF 'spot': SEC could open doors to mass cryptocurrency adoption

Despite the uncertainty, expectations are high in the financial industry regarding approval.

A key precedent is a D.C. Court of Appeals ruling that challenged the SEC’s denial of Grayscale’s request to convert its GBTC Trust into a “spot” Bitcoin ETF, suggesting that money managers could rely on this ruling in case of a refusal.

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