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- Market hopeful after networking incident; approval could redefine the landscape for Bitcoin.
- Analysts envision potential historic Bitcoin surge ahead of possible ETF approval.
Expectation among U.S. asset managers remains high that the securities regulator will allow spot bitcoin exchange-traded funds (ETFs) to trade, even after a fake post on the agency’s social media account announcing its approval generated confusion on Tuesday.
#Reuters reports that #BlackRock is set to trim fees on its spot #BitcoinETF from 0.30% to 0.25%, with no anticipated disruptions despite the recent hack. Meanwhile, #ArkInvestments and #21Shares have also slashed their spot #Bitcoin ETF fees from 0.25% to just 0.21%. #BTC 🚀💰 pic.twitter.com/6QfYPfdLZm
— Marcel Knobloch aka Collin Brown (@CollinBrownXRP) January 10, 2024
The Securities and Exchange Commission (SEC) will make a decision Wednesday on an application by asset managers Ark Investments and 21Shares to launch a spot bitcoin ETF. More than a dozen bitcoin ETF applications , including those from BlackRock (BLK.N), Fidelity and VanEck, are also pending approval by the agency.
These products would be a game-changer for bitcoin, offering institutional and retail investors exposure to the world’s largest cryptocurrency without having to own it directly, representing a significant boost for a cryptocurrency industry that has faced a series of scandals.
According to industry executives who preferred not to be identified, the SEC is expected to approve Ark/21Shares’ product, along with many others. The SEC has not disclosed how it will make its decision and a spokesperson indicated that the agency cannot comment on applications in process.
The surprise fake post on the SEC’s X account announcing approval of all products caught industry insiders and media off guard Tuesday night, sending executives scrambling to quickly investigate what was going on.
The SEC quickly debunked and removed the post, later confirming that the SEC account had been compromised and that it was due to an “unidentified individual” who gained control of a phone number associated with the agency’s account through a third party.
The apparent hack is not expected to affect the process, several sources indicated Tuesday night.
This week, issuers unveiled planned fees for their ETFs, usually one of the last details to be finalized before launch. At least three firms have filed or were preparing applications for SEC approval to launch their products on Thursday, according to three sources.
Josh Gilbert, market analyst at eToro, noted that Tuesday’s attack “certainly shook up the bitcoin market,” but that all signs indicate the SEC is ready to approve the products.
Standard Chartered analysts said this week that ETFs could attract $50 billion to $100 billion this year alone, pushing bitcoin’s price to $100,000. Other analysts have said revenues will be closer to $55 billion over five years.
“This is a big positive step for the institutionalization of bitcoin as an asset class,” commented Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. “The ETF approval will further legitimize bitcoin.”
Bitcoin has gained more than 70% in recent months on the expectation of ETFapproval for the asset. It soared to around $48,000 on the fake release, before falling below $45,000 minutes later and continuing to hover around that level late Tuesday.
The SEC’s approval of Bitcoin ETFs would be a significant change in its stance, as for ten years it rejected these funds due to concerns about possible market manipulations. Despite SEC Chairman Gary Gensler’s firm stance that Bitcoin is not a security and his criticism of the cryptocurrency industry for alleged violations of securities laws.
In response to the SEC’s concerns about potential market manipulation, issuers have implemented strategies to address these concerns. Highlighted among these strategies is a key collaboration with Coinbase Global, one of the leading cryptocurrency exchanges in the United States.
This strategic partnership involves close coordination with two of the designated exchanges for ETF listings, with the specific objective of conducting detailed and continuous monitoring of the underlying bitcoin market.
Despite concerted efforts to address regulatory concerns, some investor advocates strongly express opposition to SEC approval of these financial products. Their fundamental argument is based on the perception that the current bitcoin environment presents considerable levels of immaturity and risk.
