The move could remove some of the stigma that has clung to bitcoin for years, especially after high-profile cryptocurrency scams and business failures, and make it an even more common part of regular people’s investment and retirement portfolios.
The crypto industry hailed the decision as a major victory.
“This is a monumental step for the crypto industry,” Coinbase CEO Brian Armstrong said in an interview with CNBC. Armstrong and other crypto leaders had criticized the SEC for not being more open to bitcoin and other cryptocurrencies.
For years, the SEC had rejected similar applications for bitcoin ETFs. But last year, a federal court ruled that the regulator had not sufficiently explained its reasons for rejecting an application to list a bitcoin ETF by crypto asset manager Grayscale. Wednesday’s decision came in response to that ruling, SEC Chair Gary Gensler said in a statement.
“Based on these circumstances … I feel the most sustainable path forward is to approve the listing,” Gensler said.
Bitcoin is already far and away the most stable and popular cryptocurrency. Even after the crypto crash at the end of 2022, its price remained high relative to other crypto assets. As the first major cryptocurrency, it has had a longer history and investors are more comfortable buying it compared with a seemingly endless number of newer and lesser-known cryptocurrencies.
The industry is still rife with scams, and bitcoin is used constantly by criminals seeking to move money without being blocked by governments. The day before the SEC’s announcement, its account on X, formerly Twitter, was compromised and sent out an announcement approving the bitcoin ETFs prematurely, leading to a short spike in the cryptocurrency’s price.
The crash of crypto prices in 2022 after they rose massively during the pandemic and the conviction of crypto exchange FTX’s founder Sam Bankman-Fried for fraud have cast a shadow on the industry. Still, bitcoin is owned as an investment by millions of Americans, who see it as just another way to diversify their portfolios.
“This asset class is here to stay,” Armstrong said.
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