Bitcoin trading has become more accessible in the United States. In early 2024, a major market regulator approved bitcoin exchange-traded funds. ETFs let investors gain exposure to bitcoins without owning the cryptocurrency itself. Could this signal the start of wider adoption of digital assets as a new asset class?
Importance of advertising
The approval offers investors greater confidence in the reliability of issuers since approval requires clear, accurate information about the products under negotiation. Additionally, ETFs will be listed and traded on registered, regulated U.S. markets with safeguards designed to prevent fraud and manipulation to protect investors.
SEC decisions have a notable impact on markets. For example, in 2023, the agency classified 19 cryptocurrencies as unregistered securities, a move that would have violated regulations and led to significant losses across the crypto market.
Functions of the SEC
The SEC protects the integrity of U.S. securities markets and the interests of investors.
One role is to ensure that listed companies disclose information through rules and laws so investors can make informed decisions.
It also oversees other market participants such as exchanges, financial intermediaries, and investment funds to prevent fraud. Its oversight covers traded products and investment instruments.
Posture change
From 2018 through early 2024, the SEC rejected more than 20 requests to trade quoted spot Bitcoin products. The approval granted on January 10, 2024 has roots in a court decision. The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of a cryptocurrency asset manager asking the SEC to approve a bitcoin ETF. The court deemed that the prior rejection was not adequately justified, leading to the eventual approval of several bitcoin-linked exchange-traded funds. Yet, the agency’s chair stressed that this approval does not amount to an endorsement of the cryptocurrency itself.
Challenges and risks
With this development, Bitcoin gains legitimacy and institutional recognition and becomes more accessible to a broader audience. It can improve market liquidity, attract additional capital, and support price activity in the near term. On the flip side, cybersecurity concerns and market volatility remain relevant, and the risk of manipulation continues to warrant consideration.
Announcements from regulators can move prices. In the wake of the decision, Bitcoin’s price moved, reflecting market reactions and ongoing shifts through the period.
Investment and risk
Even with bitcoin ETFs, cryptocurrency trading carries risk. Elevated expectations can trigger large buy or sell orders, followed by corrections. Prospective investors should conduct thorough research and assess the financial risks before committing to any asset.
Other digital assets such as Ethereum have pursued similar approval, but progress has been slower. Time will reveal the true impact of this measure on digital markets. Will it mark a broader shift toward full acceptance?
All information here is presented to aid understanding and should not be taken as financial advice.