EXCLUSIVE: U.S. SEC approves Bitcoin ETFs – the crypto industry reacts

The U.S. Securities and Exchange Commission has approved 11 Bitcoin Spot ETFs in a landmark decision for the world’s largest cryptocurrency and the broader industry; as well as being heralded a win for crypto enthusiasts, paving the way for mainstream adoption.

The crypto industry in recent times has experienced a string of scandals and bankruptcies, including the implosion of FTX in November 2022 and whose founder Sam Bankman-Fried was consequently convicted of fraud; other exchanges have also been accused of flouting U.S. laws.

However, an ETF is an easy way to invest in an asset or a group of assets without having to directly buy the assets themselves, and can also be traded on stock exchanges. Despite approval, the announcement from the head of the Securities and Exchange Commission was accompanied by a warning about risks associated with the digital asset.

ETFs are listed on tightly-regulated stock exchanges such as the Nasdaq, NYSE and CBOE. Therefore, making Bitcoin accessible through investors’ existing brokerage accounts, which are also closely regulated.

What does this mean for crypto now and in the future? FF News asked crypto experts for their opinions on the SEC Bitcoin Spot ETFs announcement.

Commenting on the landmark news that the US has made its long-awaited decision to allow Bitcoin to become part of mainstream investing funds (ETFs), Nick Jones, Founder and CEO, Zumo, said: “Digital assets have now crossed the chasm to mainstream adoption and the future is very bright. With the stamp of legitimisation – and money flows – that US spot Bitcoin ETF approvals bring, crypto now has every chance to make good on its promises to democratise and update our financial system.”

“Fundamental to that promise is that the Bitcoin and blockchain future should be a truly sustainable one. Following the COP28 summit promises made in Dubai, accessing Bitcoin fund products that take ESG factors into careful consideration must become a new normal. This is why we have disrupted the market by launching our Oxygen solution to help financial institutions differentiate themselves by aligning their digital asset activities with net-zero principles.”

Eric Demuth, Co-founder and CEO Bitpanda: “After a long struggle, the SEC has finally approved a Bitcoin Spot ETF. However, it is important to remember that today’s approval was not brought about by a rethink within the SEC, it was driven by external pressure. Courts have overturned SEC rulings, forcing them to make this decision.

Whatever the cause, the approval of a Bitcoin Spot ETF is a huge milestone. From now on, long-term capital from institutional investors will flow into the crypto market. This decision will fundamentally change the industry. Until now, many institutional investors were unable to operate in the crypto sector within their regulatory framework, as they have to invest in traditional financial products. The ETFs that are now available will be a hugely important tool for institutions and major banks in the US.

I believe that the approval of a Bitcoin Spot ETF will further encourage the mass adoption of crypto-assets by institutional investors in the US. Institutional investors may be more willing to invest in Bitcoin if they have access to it through investment products such as ETFs. This is the next step into mainstream finance. Crypto is here to stay.

Although the approval is of course fundamentally very positive for the price of Bitcoin, much of the expectation that the ETF will be approved is already priced in, and it is likely that we will see a “sell the news” event after a brief upswing. In the long term, however, the higher liquidity and volume will lead to a higher Bitcoin price and could also help to reduce volatility.

The additional liquidity in the system from the US, together with other factors such as the upcoming Bitcoin halving in April or a possible drop in key interest rates, could lead to a Bitcoin price in the six-digit range in the long term. There is every possibility that we could see Bitcoin break the $100,000 mark as soon as this year. The Bitcoin ETF is another crucial step towards mass adoption of crypto assets. At Bitpanda, we are seeing a growing number of enquiries from established banks regarding our white label solution, custody solutions and other B2B products. The interest of established players to get involved in the crypto space and offer products to their customers is huge. We are ready to support them in this endeavour.”

Commenting on what the SEC decision means for the crypto regulatory landscape, Yoann Lewkowitz, Head of Legal at Coincover, says: “The BTC spot ETF approval would really mark the beginning of mass adoption. Up until now, the only way to gain exposure to this type of instrument was via a small number of exchanges that for the most part are offshore and lack clear regulatory supervision. The SEC’s potential approval is a sign of the institutionalisation of the crypto market that will pave the way for mainstream investors to dive in with the same ease as trading the S&P 500.

“Fundamental to that promise is that the Bitcoin and blockchain future should be a truly sustainable one. Following the COP28 summit promises made in Dubai, accessing Bitcoin fund products that take ESG factors into careful consideration must become a new normal”

Nick Jones, Founder and CEO, Zumo

“This landmark decision wouldn’t just be a win for crypto enthusiasts, it would also put pressure on other regulators worldwide. The SEC’s potential nod means Bitcoin would be sprinting into the mainstream faster than a digital gold rush, with other jurisdictions having to follow suit. With DeFi becoming embedded into TradFi, the onus is on regulators to begin moving the needle on putting the right safeguards in place to support this transition and foster greater trust around the crypto market.

“As with any new financial instrument, however, a spot-Bitcoin ETF does not come without risks. Volatility is a given, and widespread adoption of a spot-Bitcoin ETF would lead fund managers having to accumulate a large amount of Bitcoin in self-custodial or semi-custodial wallets which could become prime targets for hacks, attacks and possible human error. This will lead to higher expectations around risk mitigation and security capabilities, meaning security is paramount and must be a top priority for ETF managers.”

Ben Weiss, CEO and Co-Founder Of Coinflip: “This ETF approval didn’t fundamentally change what those in the space have already known for years: bitcoin is here to stay.  Whether it’s cross border payments for those left behind by the traditional financial system, or bringing transparency to complex supply chains, crypto and the blockchain will continue to shape our world.  I’m glad more investors will now have access to this incredible asset and the technology that underlies it. This is the moment we’ve been waiting for, where cryptocurrencies cement their position as the driving force behind the future of finance.

“Anticipation of a bitcoin ETF is pouring rocket fuel into the crypto market because an ETF will attract a whole new wave of investors and is expected to further increase the price, accessibility and demand for bitcoin.  Investors who would not want to hold bitcoin themselves or navigate a crypto exchange will now be able to have exposure to it, attracting a fresh surge of capital, liquidity, and increased credibility and recognition.

An ETF approval opens the floodgates and empowers a new wave of investors, both seasoned and newcomers, to take the leap into digital assets. When there is heightened momentum, people want to move fast.   Following ETF approval, we will likely see a surge of liquidity, price increases, market expansion, and institutional involvement with high-profile leaders such as Goldman Sachs already potentially eyeing its role as an authorised participant for BlackRock and Grayscale pending an approval.

Stephen Richardson, Managing Director of Financial Markets at Fireblocks, said: “The introduction of the spot Bitcoin ETF puts much needed wind in the digital assets industry’s sails, providing both retail and institutional investors with exposure to this asset class without the complexity of acquiring the underlying asset, and making digital assets more accessible for mainstream investors. There has long been a push and pull over natively digital assets being viable forms of investment, so this nod of approval by financial regulators will pave the way for increased awareness of, and investment in, this asset class more widely.

“The additional liquidity in the system from the US, together with other factors such as the upcoming Bitcoin halving in April or a possible drop in key interest rates, could lead to a Bitcoin price in the six-digit range in the long term. There is every possibility that we could see Bitcoin break the $100,000 mark as soon as this year.”

Eric Demuth, Co-founder and CEO, Bitpanda

“I think the SEC has always wanted digital assets to operate under the auspices of trusted and regulated financial institutions, especially if the asset class grew exponentially. An example is Fidelity who launched its digital assets arm in October 2018 to provide digital asset brokerage services to their retail customers, including offering exposure to crypto via retirement accounts. However, I believe the approval of the spot bitcoin ETF will likely have little to no impact on the SEC doubling down on DeFi and centralised exchanges whom they believe are not complying with existing securities laws.”

Jeff Billingham, Director of Strategy Initiatives at Chainalysis, said: “The approval of Bitcoin ETFs marks a pivotal moment, ushering in a regulated avenue for institutional participation — from independent broker dealers to bank wealth divisions and RIAs — in the crypto asset class.

“The long-term impact of spot Bitcoin ETFs extends beyond immediate price action. Their approval is a turning point for a rapidly maturing, institutional crypto market. These regulated avenues provide access for investors of all sizes and will foster a more secure market over the next three, five, and ten years. These ETFs will introduce a stabilising influence to a historically volatile crypto market and encourage the development of vigorous risk management and trade infrastructure on par with other mature asset classes.

“At Chainalysis, our focus remains on building trust in blockchains, and that extends to blockchain-based financial products like spot Bitcoin ETFs, and we’re excited to assist businesses and financial institutions in navigating this new landscape with confidence.”

Sasha Skoryk, Head of Banking Clear Junction: “The recent approval by the U.S. Securities and Exchange Commission of the first U.S. listed exchange-traded funds (ETFs) to track bitcoin marks a watershed moment for the cryptocurrency industry and a significant step toward its broader institutionalisation. This groundbreaking move, encompassing 11 applications from industry giants like Black Rock, Ark investments/21Shares, Fidelity, Invesco and VanEck, represents a game-changer that allows investors to gain exposure to bitcoin without direct ownership. With a decade in the making, these ETFs are poised to reshape the crypto landscape, injecting credibility, accessibility and potentially drawing substantial institutional capital into the market.

“As a leading B2B payments platform that’s committed to enabling fiat and crypto transfers in regulated environments, Clear Junction recognises the transformative power of these approved ETFs in giving greater legitimacy to crypto in tandem with regulatory frameworks being adopted worldwide. These developments will give much-needed clarity, reassurance and confidence for institutional and retail investors in crypto as a legitimate and trustworthy instrument. Banks, financial institutions and others that have previously been wary of engaging with crypto can move forward with the knowledge that crypto is now a mainstream investment instrument just like a gold ETF or a NASDAQ-tracker fund.”