Bitcoins can now be listed more accessible in the US. In early 2024, the US market regulator SEC approved bitcoin exchange-traded funds (ETFs). ETFs allow you to invest in bitcoins without having to purchase the cryptocurrency. Is this the first step towards widespread adoption of cryptocurrencies as a new asset class?
Importance of advertising
With this decision, investors greater assurance of the reliability of issuers Because approval obliges them to provide complete and accurate information about the products under negotiation. Additionally, with this approval, the ETFs will be listed and traded on registered, regulated US markets with regulations aimed at preventing fraud and manipulation to protect investors.
Any decision made by the SEC a notable impact and impact on markets. Some of their decisions regarding cryptocurrencies have had a strong impact. For example, accepting 19 cryptocurrencies as unregistered value in 2023 (which would have meant that they violated regulations) caused the crypto market to accumulate losses exceeding $20 billion.
Functions of the SEC
The SEC is the responsible body. Protecting the integrity of the U.S. securities marketsand to secure the interests of all investors.
One of its functions is to guarantee, through rules, laws and regulations, that listed companies disseminate information. All relevant and relevant information for investorsThus, they can make informed investment decisions.
Moreover, monitors other participants In financial markets (exchanges, financial intermediaries, investment funds) to prevent possible fraud. Its audit also covers traded products and investment instruments.
posture change
SEC, 2018 through early 2024 Refused more than 20 requests For trading quoted spot Bitcoin products. The approval given on January 10, 2024 has its origins in the court decision.
The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of cryptocurrency asset manager Grayscale, which asked the SEC to order a bitcoin exchange-traded fund. The court considered that this rejection was not properly justified, which led the SEC to finally approve a number of exchange-traded funds referencing Bitcoin. However, its chairman, Gary Gensler, pointed out that this approval does not mean that the SEC supports the cryptocurrency.
Challenges and risks
By this measure, Bitcoin achieves relative legitimacy and institutional recognition and becomes more accessible to investors. Moreover, it can increase market liquidity, attract more capital and investors, and have a positive impact on the price of the cryptocurrency, at least initially. But on the other hand, cybersecurity issues (there was another false statement in X before the SEC’s official statement) and issues related to markets will also have to be taken into account: both their volatility and the risk of manipulation.
Important announcements, as well as announcements from the SEC, can affect the prices of securities. In fact, the day after the SEC announcement, Bitcoin was valued at $48,625, but since then and throughout January, losing position.
Investment and risk
In any case, confirmation of bitcoin exchange-traded funds does not exempt transactions from risk with cryptocurrencies. Additionally, rising expectations can sometimes trigger large sales or purchases in the market and subsequent corrections. It is always worth remembering that before investing in any financial asset, it is important to conduct thorough research and carefully evaluate the financial risk to be assumed.
Other cryptocurrencies such as Ethereum are seeking similar approval, but this approval has been postponed for now. Only time will tell what the real impact of this measure is on digital assets. Will this be a first step towards its full acceptance?
News first published on The Conversation